US Dollar Price Forecast: Geopolitical Tensions and Fed Watch Drive Greenback
Published: Mar 17, 2026, 11:04 GMT+00:00
Key Points
- The Dollar Index is in a rising channel, with resistance at 100.50 and support near 99.70.
- GBP/USD is in a bearish channel below 1.3340 resistance, targeting 1.3225 support.
- EUR/USD is below major moving averages, indicating bearish momentum towards 1.1410.
- Geopolitical tensions in the Middle East and the upcoming FOMC meeting are key macro drivers for safe-haven demand.
Market Overview
The US dollar has gained support as the conflict involving the US, Israel, and Iran continues. The closure of the Strait of Hormuz has led to rising oil prices, raising concerns about war-driven inflation, which may delay the Federal Reserve's interest rate cuts. Market participants are awaiting the outcome of the Federal Open Market Committee (FOMC) meeting, which starts on Wednesday. The dollar is benefiting from safe-haven flows, but traders are cautious, seeking clarity on inflation and energy prices before making significant moves.
US Dollar Index (DXY) – Technical Analysis
The Dollar Index (DXY) is currently around 99.74, maintaining support in the 99.60-99.70 range. This area coincides with a rising trendline and short-term setup, with the index forming higher lows. Although the dollar has retreated from recent highs of 100.50, the bullish trend remains intact. The index is above both the 50-period and 200-period moving averages, supporting its strength. The RSI has cooled to the 45-50 zone, indicating a lack of momentum reversal signs. Immediate resistance levels are at 100.50 and 100.90, with a potential move to 101.30 if these are breached. Conversely, a sustained move below 99.70 could negate the bullish bias and lead to a deeper correction towards 99.20.
GBP/USD Technical Analysis
GBP/USD is trading around 1.3324, attempting a modest correction after finding support near 1.3225. The pair is testing a critical zone near 1.3340, where a falling trendline and previous resistance converge. Despite a recent bounce, the pair remains below both the 50-day and 200-day moving averages, indicating a bearish bias. The RSI has improved to the 50-55 zone, suggesting slight short-term momentum, but the overall structure remains bearish. As long as the pair stays below 1.3340, sellers may target a retest of 1.3225. A break above 1.3340 would shift the outlook to neutral, potentially opening the path to 1.3408 resistance.
EUR/USD Technical Forecast
EUR/USD is hovering around 1.1506, trying to push upwards within a broader falling channel. After rebounding from the 1.1410 support zone, the pair faces dynamic resistance between 1.1510 and 1.1540, where the 50-period moving average and the channel's mid-point intersect. The overall bias remains bearish as the pair is below the 200-period moving average. The RSI has climbed to 55, indicating some buying interest, but the risk of reversal persists as long as the pair remains within the bearish channel. A successful break above 1.1540 could lead to moves towards 1.1570 and 1.1610; however, rejection at current levels may continue the downside trend towards 1.1470 and a retest of 1.1410 lows.
Conclusion
The outlook for the US dollar remains bullish due to geopolitical risks and inflation concerns. Key levels to monitor include the 99.70 support on the DXY and the 1.3340 resistance for GBP/USD. While technical indicators suggest a temporary cooling of momentum, the broader trend will depend on the FOMC statement and developments in the Middle East.
About the Author
Arslan Ali is a finance MBA and holds an MPhil in behavioral finance. An expert in financial analysis and investor psychology, Arslan provides insights into market sentiment and the potential for instruments to be overbought or oversold.