Experts agree: Further US Dollar’s upside hinges on upcoming data and not hawkish Fed prospects
- The US Dollar holds previous week’s gains driven by the Fed’s tightening bias.
- Traders seem confident that the Fed will deliver at least one more interest rate hike this year.
- Market experts said that the Fed’s tightening bias could remain strengthened by strong US data.
The US Dollar (USD) trades slightly higher on Monday as traders remain confident that the Federal Reserve (Fed) will hike interest rates again this year. At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% higher to near 100.30.
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 strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.97% | 1.00% | 2.36% | 0.96% | 0.35% | 1.41% | 0.59% | |
| EUR | -0.97% | 0.00% | 1.35% | -0.01% | -0.61% | 0.43% | -0.39% | |
| GBP | -1.00% | -0.01% | 1.35% | -0.02% | -0.61% | 0.42% | -0.43% | |
| JPY | -2.36% | -1.35% | -1.35% | -1.36% | -1.99% | -0.99% | -1.78% | |
| CAD | -0.96% | 0.00% | 0.02% | 1.36% | -0.58% | 0.43% | -0.41% | |
| AUD | -0.35% | 0.61% | 0.61% | 1.99% | 0.58% | 1.04% | 0.21% | |
| NZD | -1.41% | -0.43% | -0.42% | 0.99% | -0.43% | -1.04% | -0.84% | |
| CHF | -0.59% | 0.39% | 0.43% | 1.78% | 0.41% | -0.21% | 0.84% |
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).
According to the CME FedWatch tool, the odds of the Fed delivering at least one more interest rate hike this year are almost 88%.
Traders repriced hawkish Fed bets after the latest dot plot unveiled at Wednesday's policy meeting showed that 16 of 18 policymakers projected at least one more interest rate hike this year. The central bank hiked policy rates by 25 basis points (bps) to the 3.75%-4.00% range last week.
Since the Fed’s monetary policy announcement, the US Dollar has gained 0.5% so far. Market experts have stated it is evident that the DXY’s strength is backed by an increase in Fed interest rate hike expectations, but have clarified that the maintenance of strength and further gains hinge on the upcoming United States (US) data.
USD support underpinned by Fed bias, but further gains hinge on data
Analysts at HSBC note that the USD “strengthened following the decision.” They highlight that “the median 2026 ‘dot’ implies one additional hike before year-end,” with “a significant minority of participants still anticipating a further rate rise in 2027.” HSBC argues that “this path is more hawkish than a ‘one-and-done’ outcome but remains below current market pricing,” meaning they “do not expect a major repricing of rate expectations or the USD.” Instead, the bank expects that “the market’s attention is likely to focus on whether incoming data validate the final projected increase this year,” suggesting any further US Dollar gains will hinge on how the economic data track against the Fed’s projected path.
Meanwhile, Deutsche Bank’s Jim Reid and his colleagues flag that, in the wake of the Fed’s latest move and ahead of the October FOMC meeting, “the focus will increasingly shift towards next Friday’s payrolls report,” which they describe as “the most important data release before the October FOMC meeting.” The bank added that this print will be pivotal for markets assessing whether Fed policy is becoming meaningfully restrictive and for validating the recent strengthening in the US Dollar Index.
Analysts at OCBC highlight that the Fed’s “renewed tightening bias should keep some support under the USD” in the near term. However, they caution that “after the repricing last week, the hurdle for another meaningful leg higher may be higher,” suggesting that the Greenback’s upside momentum is likely to be more constrained from here. In their view, “further gains may increasingly require another move up in yields or firmer US data that reinforce expectations for additional tightening.” This underscores the growing dependence of additional USD strength on either higher US Treasury yields or a fresh run of robust economic data.
US Dollar Index Technical Analysis
On the daily chart, US Dollar Index Spot trades at 100.25. The near-term tone is bullish as price holds above the 20-day Exponential Moving Average (EMA) at 99.62, suggesting buyers have reasserted control after reclaiming this dynamic support. The Relative Strength Index (RSI) at roughly 62 stays in positive territory without yet signaling overbought conditions, hinting that upside momentum remains constructive.
On the downside, immediate support emerges at the 20-day EMA around 99.62, where a break would expose a deeper corrective phase back toward recent lows. As long as the index defends this moving average, the path of least resistance remains higher, with the absence of nearby mapped resistance leaving room for the US Dollar Index to extend gains before confronting a more meaningful supply zone.
(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.
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