Dollar index tops 100 for the first time since July as the Fed's hawkish dot plot sinks in

The U.S. dollar index pushed back above 100 on Wednesday for the first time since 31 July, extending a rally that began the moment the Federal Reserve delivered its first rate hike since 2023. The index was last at 100.05, up 0.06% on the session, having traded as low as 99.92 earlier. The move is not about the hike itself — it was more than 90% priced — but about everything that came with it: a dot plot showing 16 of 18 officials expect at least one more increase this year, and a median 2026 rate projection lifted to 4.1%.

The turnaround has been swift. As recently as 9 September, the dollar was languishing near 98.4 — nine-week lows — as markets doubted the Fed would follow through on tightening. Two forces flipped that narrative: a hot August retail sales report (+1.2% versus +0.8% expected) and a hawkish FOMC that left an October hike around a 50% probability on the table.

The scale of the repricing: swap markets now reflect more than 0.90 percentage points of additional tightening by the summer of 2027, and the move has been broad — every major currency is weaker against the dollar today.

The euro and pound are on the back foot ahead of the Bank of England's decision today (expected to hold at 3.75% with a 6-3 split), while the yen is drifting weaker even with a Bank of Japan hike to 1.25% — the highest policy rate in about 31 years — almost fully priced for tomorrow.

* Chart source: official TradingView chart screenshot, Capital.com data feed (US Dollar Index), captured 17 September 2026, 09:50 am (New York time)

The dollar's move is a yield story first. The 10-year Treasury yield closed at 5.027% — its highest zone since 2007 — while the 2-year punched to 4.736%, close to its 52-week high, and the 30-year sits at 5.361%. Fed Chair Kevin Warsh told reporters inflation is "too high and has been for too long," and the SEP showed PCE inflation at 3.7% for 2026 with a return to 2% pushed out to 2029.

That combination — higher-for-longer rates and no forward guidance — is exactly the mix that tends to keep the dollar bid.

* Chart source: official TradingView chart screenshot, Federal Reserve (FRED) data feed, captured 17 September 2026.

The chart has flipped constructive, but the resistance stack above is dense. The index has cleared the 100-day moving average near 99.80 and the 50-day near 99.95, and the 200-day sits at 99.13 as first support. Above:

• Resistance: 100.50, then 100.98, with 101.50 ~ 101.64 (the July high zone) as the bigger target;

• Support: 99.13 (200-day average), then the 98.50 double-bottom zone — a decisive break below would invalidate the September recovery.

The debate now is how much follow-through the Fed can deliver. TD Securities argues the dollar rally extends only if the dot plot keeps an October hike alive — which it now does. Scotiabank cautions that with 90+ basis points of tightening already in swap prices, "any doubt about FOMC follow-through could derail the dollar." ING still sees the structural "debasement trade" as a headwind, but concedes the greenback could hold above 100 if data don't deteriorate.

• 12:00 London / 07:00 New York: the Bank of England decision — a hawkish hold at 3.75% would reinforce the "global tightening" theme and support the dollar;

• 08:30 ET: US initial jobless claims (208K expected, 206K prior) — the first labour-market test since the hike;

• Tomorrow: the Bank of Japan is expected to hike to 1.25%, the highest since 1995 — the yen's reaction will be the cleanest read on whether rate differentials or domestic tightening dominate;

• Beyond: October FOMC odds sit near 50%, and Morgan Stanley expects hikes in December and March with a terminal rate of 4.25% ~ 4.5%.

Related reads: for the equities side of the Fed decision, see Dow drops 631 points as the Fed hikes; for the full set-up into this decision, see Fed hike odds near 90% into Wednesday's decision.