DXY HOLDS ABOVE 99.50 AS FED RATE HIKE EXPECTATIONS BOOST USD
The US Dollar Index (DXY) traded near 99.60 during Tuesday’s Asian session, supported by rising expectations of a Federal Reserve rate increase. Market focus remains on the Fed’s upcoming decision and guidance on the future policy path.
Recent inflation data and higher energy prices have strengthened expectations for further tightening. According to the CME FedWatch Tool, markets are pricing around a 92.4% probability of a rate increase, up from approximately 60% one week earlier. This reflects market expectations rather than a confirmed Fed decision.
UBS noted that recent CPI data and renewed energy price gains have reinforced inflation concerns, keeping attention on the Fed’s policy stance. The market will closely watch Fed Chair Kevin Warsh’s post-meeting comments for further signals on interest-rate expectations.
Technically, DXY remains below the 100-day Simple Moving Average and the upper Bollinger Band, keeping the broader outlook cautious. The 14-day RSI near 53 suggests momentum has stabilized, but the index has yet to confirm a stronger recovery.
Key resistance levels are located at the upper Bollinger Band near 99.75 and the 100-day SMA around 99.80. On the downside, initial support is seen near the 20-day SMA and Bollinger middle band around 99.15, followed by the lower Bollinger Band near 98.55.
For market participants, the key focus remains on Fed policy expectations, inflation trends, Dollar momentum and the 99.15–99.80 technical range, which may provide further direction for DXY in the near term.
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