US Dollar Index (DXY) rises above 103.00, highest since April 2025 on Fed bets, Iran risks

The US Dollar Index (DXY) reached a new high since April 2025 during Thursday's Asian session, as bulls pursued further gains beyond the 103.00 level. A series of more hawkish Federal Reserve (Fed) officials and expectations of a substantial 50-basis-point (bps) rate hike in December fueled the rally. The benchmark 10-year US government bond yield surpassed 5% on Wednesday, bolstering the DXY.

Fed's Waller delivered a particularly strong hawkish message, with an FXS Speechtracker score of 9/10, well above the 7.3/10 historical average, indicating a pronounced bias toward additional tightening. The conditional openness to a half-point rate hike in December, contingent on core CPI reaching 0.3% or higher, and the support for a minimum quarter-point increase even in better data, reinforced the outlook for US yields and the Dollar.

The FXS Fed Sentiment Index climbed 3.17 points to 145.50, reinforcing hawkish positioning well above the neutral 100 threshold. Geopolitical tensions between the US and Iran, including recent attacks on Iranian shipping infrastructure, added to the safe-haven appeal of the US Dollar, suggesting an upward bias for the DXY. Traders will now focus on the release of the Weekly Initial Jobless Claims data, alongside Fed speeches and emerging geopolitical developments, for additional momentum.