US Dollar Index Price Forecast: Possibility of breakout above 101.80 hinges on US data
- The US Dollar Index drops to near 101.28, but is still close to its two-month high of 101.64.
- Traders trim hawkish Fed expectations as Fed’s Williams rule out the urgency of another interest rate hike.
- Investors await the US ADP Employment Change and the PCE Price Index data.
The US Dollar (USD) trades slightly lower against its key currency peers on Wednesday. At press time, the US Dollar Index (DXY), which gauges the Greenbacks value against six major currencies, is down 0.11% to near 101.28. Still, the asset is close to its two-month high of 101.64.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.10% | -0.32% | -0.22% | -0.07% | 0.17% | -0.22% | -0.10% | |
| EUR | 0.10% | -0.19% | -0.12% | 0.02% | 0.25% | -0.12% | 0.00% | |
| GBP | 0.32% | 0.19% | 0.06% | 0.26% | 0.45% | 0.09% | 0.21% | |
| JPY | 0.22% | 0.12% | -0.06% | 0.14% | 0.40% | -0.01% | 0.15% | |
| CAD | 0.07% | -0.02% | -0.26% | -0.14% | 0.24% | -0.15% | -0.00% | |
| AUD | -0.17% | -0.25% | -0.45% | -0.40% | -0.24% | -0.38% | -0.24% | |
| NZD | 0.22% | 0.12% | -0.09% | 0.01% | 0.15% | 0.38% | 0.14% | |
| CHF | 0.10% | -0.00% | -0.21% | -0.15% | 0.00% | 0.24% | -0.14% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The next move in the US Dollar hinges on a slew of US economic data scheduled this week, which is expected to drive Federal Reserve’s (Fed) interest rate expectations.
The Greenback comes mildly under pressure as traders have trimmed hawkish Fed bets for the October policy meeting after commentary from New York Fed Governor John Williams on Tuesday in which he said, “There is no need for urgency after September rate hike,” adding, “More data will help the Fed to decide what’s next for rate policy.”
According to the CME FedWatch tool, the odds of the Fed delivering an interest rate hike in October have diminished to 44.8% from 70.9% seen on Monday.
However, Fed’s Williams kept the door open for further policy tightening, citing that that “one further hike likely this year” if inflation remains entrenched.
Additionally, soft US JOLTS Job Openings data for August has also weighed on hawkish Fed expectations for October.
Meanwhile, investors await the US ADP Employment Change data for September and the Personal Consumption Expenditure (PCE) Price Index data for August, which will be published in the North American session.
The US ADP report is expected to show that the private sector created 70K fresh jobs, higher than 38K in August. Economists expect US core PCE, which is Fed’s preferred inflation gauge, is seen remaining steady at 3.3% Year-on-Year (YoY), with monthly figures growing at a faster pace of 0.3% against the previous reading of 0.2%.
US Dollar Index Technical Analysis
In the daily chart, Dollar Index Spot trades at 101.28. The index holds above the 20-day exponential moving average (EMA) at 100.40, keeping the near-term bias bullish as price extends its recovery away from the recent sub-100 area.
The Relative Strength Index (14) at 68.70 sits just below overbought territory, hinting that upside momentum remains strong but is becoming stretched.
On the downside, the 101.00 level is the key support zone before the 20-day EMA at around 100.40. On the upside, the yearly high at 101.80 is the key hurdle.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.