United States Dollar Index tests late July high, near 100.35 on hawkish Fed stance
The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, regains positive traction on Friday and maintains its bid tone through the first half of the European session.
The US Dollar Index (DXY) edged closer to its late July peak, hovering near 100.35 amid the Federal Reserve's hawkish stance. The index has been inching towards its highest level since late July, trading around 100.30. The US Federal Reserve raised interest rates for the first time since 2023 after the September policy meeting and indicated two more rate hikes this year.
Fed Chair Kevin Warsh emphasized the need to stabilize consumer prices to spur US economic growth. Geopolitical tensions, such as Iran's attack on a Togo-flagged tanker in the Strait of Hormuz, and escalating conflicts also bolstered the safety-seeking Dollar. Economists at UOB Group noted that the narrowing of US interest rate differentials relative to G-10 peers, which has been pressuring the Dollar since late 2024, may reverse, reinforcing the DXY's bullish outlook.
The DXY trades above the 100-day Exponential Moving Average and the 50.0% Fibonacci retracement, with resistance at the 61.8% retracement and key support levels at the 50.0% retracement, 100-day EMA, and 38.2% retracement.
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