US Dollar Price Forecast Tied to Key July CPI Data Release

The upcoming July CPI data release on August 11 is expected to have a significant impact on the US dollar price forecast, particularly for traders assessing the Fed's September decision. A 0.2% month-on-month increase in core CPI is anticipated, which could reflect inflation returning to the Fed's 2% target. This development has added uncertainty to prior expectations around interest rates, as persistent inflation and regional energy shocks challenge Chair Powell's decision to keep rates steady in the last meeting.

The EUR/USD is currently testing long-term resistance near $1.1556, with a breakout potentially strengthening its bullish structure. Meanwhile, the GBP/USD remains constructive above its rising trendline and moving averages while buyers challenge 1.3516 resistance. The US Dollar Index technical analysis indicates that DXY holds rising trendline support near $99.42 but remains below key EMAs.

The release of second-quarter UK GDP data on August 11 is also crucial for GBP/USD and expectations surrounding Bank of England policy, with most economists predicting a 0.4% growth in Q2. Weaker figures would mean the BoE would do more to fight inflation. For now, U.S. CPI is the most important data for currency markets.

Key technical levels for DXY include resistance at $100.36, $100.82, and $101.62, while support lies at $99.42 and below that at $98.76 and $98.18. For GBP/USD, areas of resistance are $1.3516, $1.3559, and $1.3601, with support at $1.3437, $1.3401, and $1.3343.