DXY NEAR 102.15: ONE MORE HIKE? WILLIAMS SAYS IT MAY BE APPROPRIATE
The US Dollar Index (DXY) trades near 102.15 in Wednesday’s Asian session, weakening after remarks from New York Fed President John Williams. Williams said he has not changed his view that one more rate hike may be appropriate this year, and sees no need for further increases in 2027.
Markets currently price a 77.3% probability of the Fed keeping rates unchanged at the October 27–28 meeting, up from 51% a month ago. The CME FedWatch Tool also shows around 75 basis points of tightening priced by late 2027.
The next major catalyst is Wednesday’s US CPI report. Headline CPI is expected to rise 3.6% year-on-year in September, up from 3.4% in August, while core CPI is forecast at 2.5%, compared with 2.4% previously. A hotter-than-expected reading could reinforce expectations for higher US interest rates and lift the US Dollar.
According to Scotiabank, recent Fed communication has turned less forceful, with the market pricing about 5 basis points of tightening for October and 25 basis points by December. Scotiabank also notes a narrowing in interest-rate differentials, which is USD-negative.
From a technical perspective, DXY remains above the 20-day Bollinger middle band and the 100-day SMA, maintaining a constructive near-term structure. The RSI (14) at 64.47 remains below overbought territory.
On the upside, resistance is located at the Bollinger upper band near 102.95. On the downside, initial support is at the Bollinger middle band at 101.50, followed by the 100-day SMA at 100.40 and the lower Bollinger band near 100.05.
For market participants, the key factors remain DXY near 102.15, Wednesday’s US CPI, Williams’ view that one more hike may be appropriate this year, the 77.3% October hold probability, Fed rate expectations, the 102.95 resistance level and the 101.50–100.40 support area, which may provide further context for the near-term direction of the US Dollar.
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