Dollar Soaring On Hawkish Fed Shift
USD Breaking Out
The US Dollar continues to push higher midweek with the Dollar Index now trading at its highest levels since early 2025 following the breakout above the $100 mark. Hawkish Fed expectations are underpinning the move on the back of last week’s June FOMC. The meeting, which was the first under new Fed chairman Kevin Warsh saw a firmly hawkish shift in the update dot-plot forecast.
Hawkish Dot Plot Shift
The latest projections show that nine out of eighteen policymakers expect a hike this year, with five members expecting two hikes. This is up sharply from the zero-figure seen in March and reflects the shift in Fed members’ outlook as a result of soaring inflation. On the back of the meeting, market pricing for a Fed rate hike this year surged higher to more than 80% from below 60% ahead of the meeting. With traders now widely expecting the Fed to lift rates, USD looks prone to further upside near-term, particularly in response to any bullish data. With that in mind, traders will be looking to tomorrow’s core PCE data which is expected to lift slightly on the month. If seen, this should keep USD grinding higher through the back of the week. We also have Fed’s Pill and Dhingra speaking later today, with several more due through the rest of the week and any hawkish comments will create additional support for the Dollar.
Technical Views
DXY
The rally above the $100-level is gathering pace here with the index now fast approaching a test of the May 2025 highs around 101.91 and the bull channel highs above. With momentum studies bullish, focus is on a continuation higher while price holds above the 100.18 level.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% and 74% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.