US Dollar Forecast: DXY Drops Toward 98 as EUR/USD and GBP/USD Test Key Levels

The US Dollar is struggling to maintain momentum as geopolitical uncertainty and shifting rate expectations continue to weigh on sentiment. The Dollar Index (DXY) is now drifting toward the 98.10 zone after losing key technical support, while major currency pairs like EUR/USD and GBP/USD approach critical breakout or breakdown levels.

What to Know

• The DXY has broken below an important Fibonacci support level at 98.36, opening the door for further downside toward 97.40.
• Geopolitical tensions remain elevated, but fading optimism around diplomatic progress is reducing the Dollar’s safe-haven demand.
• EUR/USD and GBP/USD are both testing key technical zones, with direction likely dependent on broader Dollar weakness.

Market Overview

The US Dollar has entered a fragile phase as conflicting geopolitical signals and macro uncertainty create choppy conditions. While tensions in the Middle East initially supported the Dollar as a safe-haven asset, that strength is fading as optimism around diplomatic developments starts to unwind.

At the same time, rising oil prices are keeping inflation risks elevated, which complicates the outlook for interest rates. This dynamic is limiting how bearish the Dollar can become, as expectations for prolonged higher rates continue to offer some underlying support.

However, with markets growing increasingly sensitive to headlines, the Dollar is struggling to sustain any meaningful rally.

DXY Technical Outlook: Bearish Pressure Builds Below Resistance

From a technical perspective, the DXY remains under pressure after failing to reclaim the 98.40 resistance zone. Price action continues to trade below key moving averages, reinforcing the broader downtrend.

Momentum indicators also support this view. The Relative Strength Index (RSI) is stabilizing but still lacks the strength needed to signal a bullish reversal.

If the Dollar fails to break back above 98.40, the next downside targets sit at 97.60 and potentially 97.30. On the other hand, a confirmed breakout above resistance could trigger a short-term recovery toward 99.20, though current conditions favor selling into rallies rather than chasing upside.

EUR/USD Outlook: Bulls Eye Break Above Resistance

EUR/USD remains relatively resilient, holding within an upward-sloping channel despite recent volatility. The pair continues to trade above key moving averages, signaling that the broader bullish structure is still intact.

However, price is now consolidating just below resistance near 1.1826. A clean breakout above this level could open the door for a move toward 1.1880 and beyond.

On the downside, support at 1.1730 remains critical. As long as this level holds, the bullish bias remains intact. A break below it would likely trigger a deeper correction.

GBP/USD Forecast: Sterling Tests Key Trendline Support

GBP/USD is currently testing an important trendline support zone around 1.3480–1.3500 following a pullback from recent highs. While the medium-term structure remains positive, momentum is clearly weakening.

The RSI is trending lower, indicating fading bullish strength. If the pair holds above support, a rebound toward 1.3550 and 1.3600 is possible. However, a breakdown below this zone could accelerate losses toward 1.3400.

Bottom Line

The US Dollar remains under pressure as geopolitical uncertainty, inflation concerns, and shifting rate expectations collide. While downside risks are building for the DXY, the broader trend will depend on how macro conditions evolve in the coming days.

At the same time, EUR/USD and GBP/USD are both approaching decisive levels, setting the stage for potential breakout moves if Dollar weakness continues.

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