US Dollar Price Forecast: Warsh Speech Looms as EUR/USD and GBP/USD Hold Firm

On August 25, the U.S. dollar commences trading amid stronger sanctions against Iran, which provide minor support as foreign companies face potential loss of access to the U.S. financial system. However, the Treasury's plan to buy back long-maturity bonds to control long-term borrowing costs has raised concerns about the fiscal credibility of the U.S. dollar.

The 10-year Treasury yields stand at around 4.7%, and investors are grappling with reconciling bond stress concerns and the Fed's rate hike plans. The euro's monetary policy remains firm, with the Eurozone composite PMI reaching 52.1 in August, its highest level since November. The manufacturing PMI also hit a 54-month high, and orders grew at the fastest pace in over three years.

Unemployment also improved for the year, with most investors expecting the ECB to raise the deposit rate from 2.25%. The Bank of England is expected to increase rates multiple times this year, with UK inflation reaching 2.9% in July. Dollar weakness, coupled with potential labor market and retail spending softness, has led to a firm Sterling.

The U.S. Dollar Index stands at $99.02, slightly up from $98.55. The short-term rebound in the DXY remains below key EMAs, maintaining a bearish structure. RSI indicates a recovery from oversold conditions, with resistance at $99.13 and $99.27, followed by $99.38 and $99.71. A break above $99.38 could push the DXY towards $98.82 and $98.55.

In the GBP/USD pair, price is currently at $1.3639, consolidating within a resistance zone of $1.3656 to $1.3676. The pair is above the 50-EMA at $1.3619 and 100-EMA at $1.3586, indicating a bullish short-term trend. RSI is at 54, suggesting neutral to positive momentum, with resistance at $1.3656, $1.3676, $1.3713, and $1.3735, and support at $1.3618, $1.3572, and $1.3526.

EUR/USD is at $1.1666, testing an important support area around the 38.2% Fibonacci retracement at $1.1658 and the 50-EMA at $1.1628. RSI has eased to around 49, indicating unwound overbought conditions. Immediate resistance is at $1.1678, followed by $1.1712 and $1.1737, while support is at $1.1658, $1.1641, $1.1624, and the rising trend line.