US Dollar Index Price Forecast: DXY declines to 99.75-99.70 amid receding Fed hike bets

The US Dollar Index (DXY) is experiencing a decline towards the 99.75-99.70 range as investors reassess expectations for an immediate interest rate hike by the Federal Reserve (Fed). This adjustment comes in the wake of reduced inflation concerns, which have prompted traders to scale back their hopes for a Fed rate increase. While the possibility remains that the US central bank may raise borrowing costs by the end of the year, concerns over inflation stemming from soaring oil prices could help contain the downside for the US Dollar.

Despite the bearish technical indicators, such as the Relative Strength Index (RSI) near 40 and the Moving Average Convergence Divergence (MACD) slipping below the zero line, traders will likely wait for a clear break below the 99.40 support level before betting on a resumption of the month-to-date downtrend. The DXY has been outperformed by the Swiss Franc and the British Pound, with the latter showing gains against the US Dollar as concerns over a September Federal Reserve rate hike push investors towards the safer haven currency.