United States Dollar Index faces mild pressure ahead of Meta Q3 earnings
- The US Dollar Index trades cautiously near 101.68 ahead of Meta Q3 earnings.
- AI growth concerns have kept the US Dollar and bond yields under pressure in the past few weeks.
- This week, investors will also focus on the flash US S&P Global PMI data for October.
The US Dollar trades with caution against its peers ahead of Meta Q3 earnings later in the day. In the European trade on Wednesday, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades mildly lower to near 101.68. The DXY is close to its almost three-week low of 101.50 posted last week.
The impact of Meta’s earnings is expected to be significant on the US Dollar and United States (US) Treasury Yields, as recent arguments from market experts have signaled that spending on Artificial Intelligence (AI) infrastructure by US hyperscalers has become a key driver for them.
US bond Yields and the US Dollar have retreated from their recent highs amid concerns over AI-growth.
US Dollar Price Last 7 Days
The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.29% | -1.08% | -0.25% | -1.22% | -0.73% | -1.36% | -1.01% | |
| EUR | 0.29% | -0.79% | 0.04% | -0.94% | -0.43% | -1.07% | -0.70% | |
| GBP | 1.08% | 0.79% | 0.85% | -0.12% | 0.41% | -0.28% | 0.06% | |
| JPY | 0.25% | -0.04% | -0.85% | -0.98% | -0.47% | -1.09% | -0.75% | |
| CAD | 1.22% | 0.94% | 0.12% | 0.98% | 0.51% | -0.08% | 0.20% | |
| AUD | 0.73% | 0.43% | -0.41% | 0.47% | -0.51% | -0.68% | -0.33% | |
| NZD | 1.36% | 1.07% | 0.28% | 1.09% | 0.08% | 0.68% | 0.35% | |
| CHF | 1.01% | 0.70% | -0.06% | 0.75% | -0.20% | 0.33% | -0.35% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Analysts at MUFG said after recent correction that US financial markets have been “a major beneficiary of strong foreign investor demand driven by AI-related optimism.” They note that foreign investors purchased “USD942 billion of US equities in the twelve months to July, while purchases of US corporate bonds increased sharply to USD452 billion over the same period.” MUFG argues that these “sizeable inflows highlight how the USD has become increasingly tied to investors’ search for higher returns in US financial markets, rather than benefiting from its traditional safe-haven status.” However, they caution that “this dynamic also leaves the USD more exposed to a reversal if sentiment towards AI deteriorates.”
Financial markets will pay close attention to Meta’s guidance on their AI-related spending plans. According to INDMoney, Meta’s capital expenditure outlook is $130 billion to $145 billion for 2026. Its presentation showed $50.918 billion spent in the first half. Assume Q3 matches the $41.68 billion estimate, and the remaining requirement becomes straightforward.
Signs of a slowdown in spending on AI infrastructure by Meta in their guidance commentary would weigh on the US Dollar’s outlook.
On the economic data front, investors await the preliminary US S&P Global PMI data for October, which will be released on Friday. The data is expected to show that the overall business activity expanded again, but at a moderate pace.
US Dollar Index Technical Analysis
In the daily chart, the Dollar Index Spot trades at 101.67. The index holds just above the 20-day Exponential Moving Average (EMA) at 101.66, keeping the near-term bias mildly bullish as price action remains supported by this dynamic floor. The Relative Strength Index (RSI) at 53.39 sits slightly above neutral, hinting at steady but not overextended upside momentum while the index consolidates near recent highs.
On the downside, initial support is indicated by the 20-day EMA at 101.66, where a sustained break lower would weaken the constructive tone and open the door to a deeper pullback. With no nearby technical resistance levels in the current dataset, traders may look to psychological handles and prior swing highs above the market for potential supply zones, while the prevailing setup favors dip-buying as long as the index holds over the 101.66 area.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Recommended Articles
