US Dollar Eyes Best Month in 14 Months as Fed Hike Bets Rise

Traders' Opinions

Summary:

DXY holds near 101.40 as high Treasury yields and expectations for further Fed tightening support the Dollar. ADP, PCE and Friday’s payroll report could determine whether the rally extends.

BUY USDX

EXP

PENDING

100.880

Entry Price

102.400

99.800

101.210 +0.040 +0.04%

Pips

PENDING

99.800

Exit Price

100.880

Entry Price

102.400

The US Dollar extended its advance during Wednesday’s early European session, with the US Dollar Index (DXY) trading near 101.40 as investors continued to position for additional Federal Reserve tightening. The Greenback is now heading toward its strongest monthly performance in 14 months, supported by elevated Treasury yields and growing expectations that US interest rates have further to rise.

The latest push higher reflects a market increasingly convinced that persistent inflation could force the Fed to maintain a restrictive stance. Chicago Fed President Austan Goolsbee warned that inflation remaining above target represents a dangerous situation that could require a policy response, while Fed Governor Michael Barr indicated that further rate increases will probably be necessary to bring inflation under control.

New York Fed President John Williams offered a more measured message, suggesting another increase this year may be appropriate while stressing that policymakers do not need to move urgently following this month’s hike. That distinction has tempered expectations for immediate action without significantly changing the broader hawkish outlook.

Markets currently assign a 47.1% probability of an October hike, while the likelihood of an increase by December stands at 92.5%, according to the CME FedWatch Tool. This continues to provide a supportive backdrop for US yields and, by extension, the Dollar.

Attention now turns toward Wednesday’s ADP employment report and PCE inflation figures. Stronger employment growth or another indication that inflation remains stubborn could strengthen the argument for additional tightening and provide fresh momentum for DXY.

Friday’s September employment report represents another major test. Nonfarm Payrolls are expected to increase by 90,000, down from 162,000 in August, while unemployment is forecast to remain unchanged at 4.1%. OCBC sees the employment report as the week's key risk, particularly as falling jobless claims suggest labour conditions may be stronger than headline forecasts imply.

The Dollar's underlying setup remains constructive. Markets may debate whether the next hike comes in October or later, but the more important factor is that expectations for further tightening remain firmly alive. Unless upcoming US data materially undermine that narrative, elevated yields should continue to favour the Greenback.

Technical Analysis

The US Dollar Index remains positioned within a bullish four-hour structure, despite the latest pullback from the 101.30 area. The broader advance from the September lows remains intact, with DXY continuing to print a sequence of higher highs and higher lows.

Price is currently retreating toward the 100.75–100.90 region, which represents an important near-term support zone. Holding above this area would keep buyers firmly in control and could provide the base for another attempt at the 101.30–101.40 resistance zone.

A decisive four-hour break above 101.40 would be an important bullish confirmation, clearing a major resistance barrier that previously capped the Dollar in July. Such a move could accelerate the advance toward 101.55, followed by 102.00 and ultimately the 102.40–102.50 region indicated by the current structure.

On the downside, failure to defend 100.75 would open the door to a deeper correction toward 100.35–100.40. This remains the more important support area for the broader bullish setup. A sustained break beneath it would weaken the current higher-low structure and expose 99.80–99.90.

For now, the latest decline looks more like a retracement within the broader Dollar recovery rather than a confirmed reversal. As long as DXY remains supported above 100.40, the technical bias continues to favour another push higher.

TRADE RECOMMENDATION

BUY DXY

ENTRY PRICE: 100.88

STOP LOSS: 99.80

TAKE PROFIT: 102.40

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education

Data

US Dollar Eyes Best Month in 14 Months as Fed Hike Bets Rise

Technical Analysis

Risk Disclosure