USD forecast: Dollar Index surges above 98.00 – Next scenarios to watch [Video]

Dollar on the move with macro catalysts and structure validation

The U.S. Dollar Index (DXY) has confirmed the bullish scenario outlined in our - Dollar forecast: US Dollar fails to hold 99.00 – Sinks below 98.00 – What’s next? - and recent webinar, surging sharply after bouncing from the 97.50 level:

Previous forecasts

Current price action

This reversal has pushed the greenback back above the critical 98.00 level, invalidating the bearish fair value gap (FVG) structure that capped price action in mid‑July. With price now pausing near 98.70, the Dollar is poised to reach the 99.00–99.50 resistance zone if momentum holds.

US Dollar macro drivers

• Investor attention now turns to the Federal Reserve’s July 29–30 FOMC meeting, where no rate changes are expected. Markets are pricing in a 63.7%(still developing, might change) probability of a rate cut in September, contingent on incoming jobs, PCE inflation, and GDP data.
• A new U.S.–EU trade agreement agreed on July 28 imposed 15% tariffs on most EU goods, halving the threat of 30% tariffs. This clarity has eased geopolitical uncertainty and spurred strength in the U.S. dollar, even as European equities and risk assets rallied.
• The European Central Bank (ECB) held its benchmark rate at 2.15%, dampening expectations of imminent rate cuts and contributing to euro weakness, pushing the dollar for more upside since Euro is weighted with the U.S. dollar by 57.6%.
• BlackRock’s commentary flagged the adoption of the U.S.’s Genius Act as legitimizing stablecoins and reinforcing the dollar's dominance in global payments infrastructure—supportive of long‑term dollar strength.

Technical outlook: DXY at inflection zone

The Dollar Index (DXY) is currently trading around 98.66–98.70, approaching a key resistance zone just below 98.95–99.00. This area aligns with the previous mid‑July resistance level, making it a crucial inflection zone for the next directional move.

Bullish scenario: Continuation to 99.50

• If the U.S. dollar holds the 98.40–98.50 demand zone (highlighted in blue) after a potential pullback, we could see a continuation toward the 99.00–99.20 resistance zone.
• A clean breakout above 98.30–98.50 Fair Value Gap level would confirm strength and open the door for an extension to the 99.50 target.

Triggers:

• Hawkish or neutral Federal Reserve guidance at the upcoming FOMC meeting.
• Strong Non‑Farm Payrolls and other U.S. macro data supporting USD demand.

Targets:

• Immediate: 98.95–99.00.
• Extension: 99.50.

Bearish scenario: Rejection and breakdown

• If price fails to break through 98.95–99.00 and instead rejects, expect a retest of the 98.40–98.50 support zone.
• A decisive breakdown below 98.40-98.30 would shift sentiment bearish, exposing 97.80 first and the 97.40 liquidity sweep zone next.

Triggers:

• Dovish Fed tone or weak macroeconomic releases (e.g., disappointing NFP).
• Risk‑on market sentiment weighing on safe‑haven demand for USD.

Targets:

• Initial: 98.40–98.50 support zone.
• Breakdown: 97.80, then 97.40.

Anticipating key news releases this week

The Dollar’s next move will likely hinge on a packed of major high-impact news:

• Wednesday, July 30: ADP Employment Change, Q2 GDP (PREL), and the FOMC interest rate decision & press conference.
• Thursday, July 31: Core PCE inflation (Fed’s preferred gauge).
• Friday, August 1: Non‑Farm Payrolls, Average Hourly Earnings, and ISM Manufacturing PMI.

These events are high‑impact catalysts that could either confirm the bullish continuation or trigger a rejection at current levels.