US Dollar Price Forecast: Hawkish Warsh Lifts DXY as EUR/USD and GBP/USD Fall

The market impact is near-term bullish for the U.S. dollar and bearish for EUR/USD, but the durability of the move depends on whether higher September Fed-hike expectations are confirmed by U.S. data and Fed communication.

• Policy repricing is the main driver. The reported rise in September rate-hike probability from 35% to 57% increases expected front-end U.S. yields and widens the U.S.–euro-area rate differential. The article also places the two-year Treasury yield near a one-month high, reinforcing the dollar’s carry advantage.
• EUR/USD has lost short-term technical support. The break below the rising trendline, the 1.1640 area and the 50-period EMA weakens the prior bullish structure. If sellers maintain control below 1.1640, the cited downside zones near 1.1571 and 1.1547 become relevant reference areas; a recovery above 1.1640 would indicate that the dollar impulse is losing momentum.
• The move is not an unambiguous euro-negative story. The article describes the ECB as retaining a tightening bias, with another hike still possible if inflation remains elevated. That policy support could limit EUR/USD downside if euro-area inflation or ECB communication turns more hawkish than expected.
• Risk sentiment may amplify dollar demand. Reported Gulf tensions and defensive positioning provide a second channel for dollar strength beyond interest-rate differentials. However, geopolitical support is headline-sensitive and can reverse quickly if tensions ease or markets shift back toward growth and carry trades.
• Broader cross-asset implications: A sustained rise in U.S. real yields and the dollar would generally pressure gold, high-beta currencies and other rate-sensitive risk assets, while supporting dollar liquidity and defensive positioning. The effect on equities is mixed: higher yields can weigh on valuation multiples, while geopolitical risk can support selected defense and energy exposures.

Trading interpretation:

The initial bias is dollar-positive/EUR/USD-negative on a short-term horizon. The key test is whether EUR/USD remains below 1.1640 while U.S. rate expectations stay elevated. The bearish dollar interpretation would regain credibility if upcoming U.S. labor or inflation data weaken, Fed officials push back against a September hike, or the ECB maintains a clearly more hawkish trajectory. The cited technical levels are reference points rather than confirmation of a lasting trend.