US Dollar Price Forecast: Safe-Haven Demand Lifts Dollar as Middle East Tensions Grow — GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) extended its advance during the Asian session, trading near 99.10 for a third consecutive day. The move follows the Federal Reserve’s decision to leave interest rates unchanged at 4.25%–4.50% during its June meeting. While expected, the Fed’s restrained tone reinforced dollar strength, with Chair Jerome Powell signaling that rate cuts would depend on sustained progress in inflation and employment metrics.

The FOMC’s projections now reflect around 50 basis points of rate reductions by the end of 2025. Powell noted that inflation remains slightly above the Fed’s 2% target and flagged that tariffs could further complicate the inflation outlook, justifying a data-dependent approach.

Geopolitical Tensions Enhance Safe-Haven Demand

In addition to monetary policy, geopolitical risk is lending support to the Greenback. Reports from Bloomberg and the Wall Street Journal indicate rising tensions in the Middle East, with US officials preparing contingency plans. Although no final decision has been made, markets remain cautious.

Outlook: Dollar Likely to Stay Bid

With the Fed’s cautious tone and heightened global uncertainty, the DXY appears well-supported. Traders will watch upcoming inflation and labor data for guidance on the timing of future policy shifts.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) has extended its recovery, climbing above 99.00 and trading within a well-defined ascending channel. The index has gained momentum after reclaiming the 50-EMA at 98.70 and the 200-EMA at 98.61, both of which now act as dynamic support levels.

Current price action suggests bullish continuation, with buyers eyeing the next resistance at 99.38. If that level is cleared, further upside toward 99.64 and 99.88 may follow.

The bullish trend structure remains intact, supported by a sequence of higher highs and higher lows. Momentum favors further strength as long as DXY holds above 98.94. A break below 98.56 would suggest weakening momentum.

GBP/USD Technical Analysis

GBP/USD remains under selling pressure, hovering near $1.3406 after decisively breaking below both the 50-EMA ($1.3484) and 200-EMA ($1.3499) on the 2-hour chart.

The pair failed to hold support at $1.3421, with price action now flirting with the next key zone around $1.3360. The downtrend has accelerated since rejecting resistance at $1.3573 last week, with lower highs and lower lows forming a clear bearish structure.

Unless bulls reclaim $1.3471 quickly, the next downside levels to watch are $1.3312 and $1.3263. Momentum remains with the sellers, and the bearish crossover of the moving averages reinforces the negative outlook for sterling in the near term.

EUR/USD Technical Forecast

EUR/USD remains under pressure, trading near $1.1462 within a well-defined descending channel on the 1-hour chart. The pair failed to reclaim the 50-EMA ($1.1496) and 200-EMA ($1.1492), both of which are now reinforcing downside momentum.

After multiple failed attempts to break above $1.1530, price action has shifted decisively bearish, with lower highs and lower lows confirming the short-term trend.

Immediate support lies at $1.1424, followed by $1.1398 if bearish momentum accelerates. Any recovery would need to clear $1.1490 to negate the downtrend bias. With the U.S. Dollar Index trading strong, EUR/USD may stay under pressure unless macro data shifts sentiment. The path of least resistance remains to the downside.