US Dollar Price Forecast: CPI Data Looms as DXY Holds $98
Author: Arslan Ali
Published: July 15, 2025
Market Overview
The US Dollar Index (DXY) has decreased to 98.10, ending a four-day winning streak as traders anticipate the upcoming June Consumer Price Index (CPI) data. This inflation report is expected to influence the Federal Reserve's policy decisions for the third quarter.
Tariff Threats and Geopolitical Risks
The decline in the dollar's value is attributed to rising geopolitical tensions. Former President Donald Trump has threatened to impose new tariffs, warning of severe measures against Russia if a peace agreement is not reached within 50 days. He has also proposed secondary sanctions on nations that continue to import Russian oil.
Additionally, Trump announced a 30% tariff on goods from the EU and Mexico, effective August 1, and a general tariff increase to 15-20%. A 17% duty on fresh tomatoes from Mexico has also been implemented, contributing to market caution and reduced demand for the dollar.
Furthermore, Trump confirmed a significant arms package to Ukraine, which has heightened geopolitical uncertainty.
Fed’s Hawkish Stance Provides Support
Despite the global tensions, the dollar is supported by the Federal Reserve's firm policy stance. Cleveland Fed President Beth Hammack emphasized the necessity for a restrictive policy due to ongoing inflation and a resilient US economy. She indicated that there is no immediate urgency to cut rates, especially with increasing fiscal risks.
Market participants are now looking forward to the CPI data for insights into the Fed's next steps. Until then, uncertainties regarding tariffs and rate expectations are likely to limit further declines in the dollar's value.
Technical Analysis of the US Dollar Index (DXY)
The DXY is currently consolidating just below the 98.00 mark after reaching a peak near 98.14, while maintaining support above 97.88. The index is within a defined ascending channel, with the 50-period EMA at 97.79 and the 200-period EMA at 97.70 serving as dynamic support levels. As long as the price remains above these moving averages, the bullish trend is expected to continue.
Potential upside targets include 98.14, with stronger resistance at 98.28 and the recent high at 98.43. A sustained breakout above these levels could trigger additional buying. Conversely, a drop below 97.88 may lead to support at 97.66 and 97.50, aligning with previous demand zones.
GBP/USD Technical Analysis
The GBP/USD pair is attempting a rebound after finding support near the 1.3417 level, which corresponds with the 0% Fibonacci retracement and a key demand zone. A short-term bullish move is evident, challenging the 0.236 Fibonacci resistance at 1.3456. If the bulls can push past this level, further recovery could target the 0.382 level at 1.3481 and the 0.5 retracement at 1.3501.
However, the pair remains within a descending channel, with the 50-period EMA at 1.3510 and the 200-period EMA at 1.3574 positioned above the current price, reinforcing a broader bearish outlook. A close below 1.3417 would invalidate the current bounce and expose support levels at 1.3395 and 1.3369.
EUR/USD Technical Forecast
The EUR/USD is trading around 1.1688, attempting to break out of a downward-sloping channel. Immediate resistance is at the upper boundary of the channel and the 50-period EMA near 1.1692. A clear breakout above this level could shift the short-term bias from bearish to neutral, potentially leading to resistance levels at 1.1707 and 1.1749.
On the downside, the 200-period EMA near 1.1676 is providing dynamic support, with horizontal support levels at 1.1659 and 1.1625. A break below these levels could accelerate bearish momentum towards 1.1590.
Conclusion
The US Dollar is currently facing pressures from geopolitical risks and tariff threats, while the Federal Reserve's hawkish stance provides some support. Market participants are closely watching the upcoming CPI data for indications of future monetary policy adjustments.