US Dollar Price Forecast: Warsh Looms as DXY Rebounds, EUR/USD Pulls Back; GBPUSD Key Levels

The US Dollar Index (DXY) has rebounded, nearing a one-week high as investors await the first speech by Federal Reserve Governor Kevin Warsh at the Jackson Hole symposium on August 28. Despite sticky July PCE inflation at 3.7% and 3.3%, respectively, market concerns persist regarding potential further tightening by the Federal Reserve.

Futures indicate a 35% chance the Fed will act by September, increasing to around 75% by December. However, Warsh's lack of clear guidance adds uncertainty. Meanwhile, the euro benefits from a more hawkish policy backdrop; the European Central Bank (ECB) minutes suggest another rate hike is likely in September, with a potential rise from 2.25% to 2.50%.

The July inflation rate remains around 3%, while corporate lending grew by 4.4%. Sterling faces a less hawkish stance, with only a 15% chance of a Bank of England rate hike in September and a full quarter-point increase not expected until around February 2027. GBP/USD is trading below the 50 EMA at 1.3595 and the 100 EMA at 1.3557, while the U.S. Dollar Index hovers near 99.20 on the 4-hour chart after recovering from a low of 98.56.

If the index breaks and holds above the 99.25 level, it could extend to 99.48, 99.68, and 99.99, with a next major resistance at 100.38. Conversely, support levels are at 99.12, 98.99, 98.82, and 98.56. GBP/USD and EUR/USD face varying conditions, with the latter in a potentially dangerous corrective phase.