US Dollar Price Forecast: DXY Near 99.38 as Fed Minutes and UK Inflation Loom

Published: August 19, 2026

Key Points

• The upcoming Fed minutes are expected to provide insights into policymakers' views on interest rates and inflation.
• Current market expectations favor a hold on rates by the Fed in September, with a probability of 65% for no change.
• Expectations of tightening by the European Central Bank (ECB) are supporting the euro, as inflation remains above target.
• UK inflation data is crucial for the British pound, as the Bank of England (BoE) navigates persistent inflation against a cooling labor market.
• The DXY index is vulnerable below the 99.89–100.19 EMA cluster, with 99.38 as a critical support level.

Market Overview

The focus is on the minutes from the July Fed meeting, which will reveal the level of division among members regarding potential rate hikes. Recent domestic data indicates a slowdown, with negative job reports and milder inflation, leading markets to lean towards a hold on rates. However, concerns about Middle East supply could lead to inflation surprises and potential rate hikes.

Euro and UK Pound Dynamics

The euro may strengthen against the dollar, with inflation in the EU at 2.9%, still above the ECB's target. A survey indicates that a majority of economists expect a 25 basis point increase in the ECB's interest rate in September. In the UK, inflation is expected to rise to 2.9%, with the BoE likely to maintain the Bank Rate at 3.75% through the end of 2023.

Technical Analysis

U.S. Dollar Index (DXY)

The DXY is trading around 99.55, having declined from 101.60. It remains below the 50 and 100-day EMAs, indicating a negative short-term outlook. The critical support level is at 99.38, and a break below this could lead to further declines.

GBP/USD Analysis

The GBP/USD is consolidating above a rising trendline near 1.3540, with resistance at 1.3565. The bullish structure is supported by an ascending trendline, and a break above 1.3565 could lead to further gains.

EUR/USD Analysis

The EUR/USD is at 1.1586, supported by a rising trendline. The price is above both the 50 and 100 EMAs, indicating a positive outlook. Resistance levels are at 1.1614 and 1.1649, while support is at 1.1570.

Conclusion

The main theme in the FX market is policy divergence, with fading Fed-hike expectations, a hawkish ECB, and a constrained BoE. Traders are advised to monitor the upcoming economic data closely, as it will significantly influence currency movements.