EUR/USD forecast: Dollar rally eyes 98.20 breakout ahead of CPI, puts Euro under pressure

Dollar bounce from bullish fair value gap confirms upside structure

The U.S. Dollar has materialized its bullish forecast, bouncing decisively off the 97.60–97.80 Bullish Fair Value Gap and extending gains near the 98.201 level.

This move confirms the previous forecast published - US Dollar forecast: Bullish continuation validated as DXY targets 98.20 breakout -, signaling a potential continuation toward the 98.50–99.00 levels.

• Technical Validation: Price respected the Fair Value Gap (FVG) and surged with momentum, supporting a bullish structural continuation.

• Macro Drivers: Risk-off sentiment due to renewed trade tensions (Trump's tariff threats) and higher Treasury yields further supported the dollar.

• Institutional Positioning: The bounce shows clear institutional demand at discount levels, confirming the thesis that dollar strength is not a retracement but a resumption.

CPI report: The key volatility catalyst

The upcoming U.S. CPI data (Tuesday, July 15 @ 8:30 UTC) is expected to trigger sharp volatility in EUR/USD:

If CPI beats forecast:

• DXY is likely to break above 98.201 decisively

• EUR/USD could break below 1.1600

• Bearish continuation to 1.1550 or lower

If CPI misses expectations:

• DXY rally may stall or retrace back to 97.70–97.85

• EUR/USD could rebound toward 1.1700–1.1740

• Opens short-term opportunity for EUR strength

Technical outlook: EUR/USD poised for breakdown after range consolidation

Previous Analysis: Bitcoin Breaks Out, Gold Eyes $3,400, Nasdaq Powers Up, USD up next? – What’s Next for this week?

EUR/USD is respecting a bearish continuation structure, trading within a tight consolidation zone just below the 50% of the range or the equilibrium level. With U.S. dollar gaining traction, Euro struggles to regain strength.

Bullish scenario: Reclaim of 1.1715 resistance

If U.S. CPI surprises to the downside and weakens the dollar:

• EUR/USD must reclaim and close above 1.1717, invalidating the current distribution range.

• This shift would signal demand stepping in and could trigger a squeeze toward:

• • 1.1750 (minor resistance)

Invalidation: Daily close back within the range below 1.1717 would invalidate bullish outlook.

Bearish scenario: Breakdown through 1.1641 support

If CPI data supports USD strength and DXY breaks above 98.201:

• A clean break and close below 1.1641 confirms the range breakdown.

• Momentum could accelerate toward:

• • 1.1580 – swing low target from June

  • 1.1500 – psychological level and liquidity pool

Confirmation: Lower highs continue to form beneath 1.1717, and clean sweep or break of 1.1641 with increased volume would validate this bearish move.