US Dollar Price Forecast: Rises on Middle East Tensions and PPI Miss – GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) climbed back above 98.00 during early Friday trading, reaching 98.20, as safe-haven demand offset soft US economic data. The rebound follows rising geopolitical tensions in the Middle East, including unconfirmed reports of additional Israeli airstrikes and the confirmed death of Iranian commander Hossein Salami.

Labor Market Cools, PPI Misses Expectations

The latest jobless claims data pointed to a cooling US labor market. Initial claims rose to 248,000 for the week ending May 31, matching the prior week’s revised figure. Continuing claims increased to 1.956 million, while the four-week average rose to 240,250.

Producer Price Index (PPI) data also signaled subdued inflation. Headline PPI rose 2.6% year-over-year in May, while core PPI increased 3.0%, slightly below forecasts. Monthly gains for both were limited to 0.1%.

Geopolitical Risk Supports USD Ahead of Sentiment Data

Despite economic softness, the dollar advanced amid concerns about geopolitical risk. The market is now watching the University of Michigan’s Consumer Sentiment Index, due later today, for further direction on inflation expectations and consumer confidence.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading near 98.15, struggling to build on its recent rebound after finding temporary support at 97.96. Price remains capped below the 50-period EMA at 98.52, reinforcing the short-term bearish structure. A downward-sloping trendline from the late May high continues to weigh on any upside attempts.

Despite a brief recovery, the index has failed to break above key resistance at 98.50, where prior consolidation also occurred. The rejection near this level, paired with continued lower highs, signals weak bullish conviction.

Unless DXY reclaims the 98.86–99.22 range, downside risk persists, with support levels at 97.60 and 97.30 likely to come into play if sellers regain control in the following sessions.

GBP/USD Technical Analysis

GBP/USD is trading around 1.3562 after rebounding from the ascending trendline and 50-period EMA support near 1.3540. The pair is attempting to regain bullish momentum following a sharp drop from the 1.3632 resistance area.

While price remains above the 200-period EMA at 1.3500, recent lower highs suggest some hesitation near key resistance levels. A sustained move above 1.3598 would strengthen the bullish case, potentially opening the door toward 1.3640 and 1.3670.

On the downside, a break below 1.3500 could expose 1.3456. For now, short-term sentiment remains cautiously bullish as long as the pair respects the ascending structure and maintains alignment with the moving average.

EUR/USD Technical Forecast

EUR/USD is trading near 1.1542 after briefly retreating from the 1.1615 resistance zone. Despite the pullback, the pair continues to trade within a well-defined uptrend, supported by the rising 50-period EMA at 1.1492 and the 200-period EMA at 1.1403.

Price action shows a minor retracement after hitting a multi-week high, but key support at 1.1511 has held so far. A sustained move above 1.1577 could reopen the path toward 1.1657.

On the downside, a break below 1.1511 would expose the 1.1458–1.1407 demand zone. As long as the price holds above the EMAs and the trendline, the bullish bias remains intact despite near-term volatility.