US Dollar Price Forecast: Softer PPI Boosts Fed Cut Bets – Can EUR/USD and GBP/USD Rally?

The U.S. dollar experienced a decline on August 14 due to unexpectedly low inflation rates, suggesting a higher likelihood of the Federal Reserve cutting interest rates. The Producer Price Index (PPI) data showed unchanged wholesale goods inflation and a slight rise in core PPI, providing reassurance that inflation pressures were easing.

While the euro faced domestic challenges, the European Central Bank maintained its cautious approach amid geopolitical concerns and slower demand. The UK's sterling currency was under pressure after a modest increase in second-quarter GDP, with the Bank of England needing to strike a balance between inflation and rising wages and energy prices.

The U.S. Dollar Index hovered around 99.95, fluctuating between support and resistance levels, showing potential for a new upward trend. For GBP/USD, the pair was trading near 1.3487, with bullish momentum supported by a rising trendline and positive RSI, though it needed to overcome the 1.3515 resistance area. EUR/USD was trading around 1.1530, showing signs of recovery but constrained by a downward trendline, with potential for a move toward 1.1620 and 1.1674 if buyers break the long-term downtrend line.