US Dollar Price Forecast: Fed Rate Fears Prop Dollar Up – Can GBP/USD and EUR/USD Hold Their Gains?
Published: May 01, 2026
Key Points
- The DXY index is currently below a descending trendline at 99, indicating a bearish lower high with the RSI trending down towards 97.80.
- A rejection at 99.30 suggests strong selling pressure, necessitating a break above 99 to negate the bearish outlook.
- GBP/USD has surpassed the 1.3580 resistance level, with the RSI above 60, indicating bullish momentum and targets at 1.3650 and 1.3720.
- EUR/USD has rebounded from a rising trendline support near 1.1670, with potential targets at 1.1800 and 1.1850 if it breaks above 1.1755.
Market Overview
The global currency market is currently influenced by geopolitical tensions, particularly the US-Iran conflict and disruptions in the Strait of Hormuz. Despite rising oil prices, the US dollar remains strong due to its status as a safe haven and the overall health of the US economy, which is bolstered by oil exports. The ongoing inflation concerns are making the Federal Reserve cautious about cutting interest rates, further supporting the dollar's strength.
DXY Forecast: Bearish Rejection Below Trendline
The US Dollar Index is struggling around 98.00, facing resistance at the descending trendline near 99.00. The price action indicates a bearish trend, with the 50-day EMA acting as resistance. A rejection at 99.30 highlights significant selling interest, and the RSI's decline suggests weakening bullish momentum. Key support levels are at 97.80 and 97.20, with a bullish reversal requiring a move above 99.00.
GBP/USD Analysis: Bullish Breakout Signals Momentum Continuation
GBP/USD is trading around 1.3605 after breaking above the 1.3580 resistance, indicating a strong bullish trend. The price is above both the 50 and 200 EMAs, and the RSI above 60 confirms momentum. Resistance levels are at 1.3650 and 1.3720, while 1.3500 serves as a critical support level.
EUR/USD Outlook: Trendline Support Holds as Bulls Regain Control
EUR/USD is currently at 1.1735, having bounced off a rising trendline support at 1.1670. The RSI indicates a recovery, and a break above 1.1755 could lead to targets at 1.1800 and 1.1850. A drop below 1.1680 would signal potential difficulties ahead.
Trade Ideas
- For GBP/USD, consider buying on dips above 1.3500 with targets at 1.3650 to 1.3720.
- For EUR/USD, buying above 1.1700 is suggested, targeting 1.1800 with a stop loss below 1.1670.
Author Information
Arslan Ali is a finance MBA and holds an MPhil in behavioral finance. He specializes in financial analysis and investor psychology, providing insights into market sentiment and potential overbought or oversold conditions.