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Dollar index holds near 100.85 as Fed and Middle East drive caution

The US Dollar Index is set to finish the week virtually unchanged after slipping to a one-week low of 100.60 earlier, with FedWatch showing about a 66% chance rates stay put this month and 70% odds of a September hike.

Reported · Written up by our desk · Major Pairs

The US Dollar Index, which measures the greenback against a basket of six major currencies, traded in a volatile but range-bound manner on Friday as a sparse US economic calendar left investors focused on renewed US-Iran hostilities and the outlook for US monetary policy, according to FXStreet.

Even with renewed tensions adding some uncertainty, the move was limited, and the DXY was set to finish the week virtually unchanged. At the time of writing, the index was around 100.85 after dipping to a one-week low of 100.60 earlier in the Asian session.

FXStreet said hawkish Federal Reserve expectations kept dollar bears cautious. Minutes from the Fed's June policy meeting released Wednesday were cited as reinforcing the view that interest rate cuts are off the table, while New York Fed President John Williams said inflation remains far above the central bank’s 2% target.

Looking ahead, FXStreet pointed to next week’s US CPI data due Tuesday as a key catalyst for the Fed’s rate path expectations. The outlet also cited the CME FedWatch Tool, which shows markets pricing roughly a 66% probability of no change at this month’s meeting and about 70% odds of a rate hike in September.

Latest closeDollar index 100.97 ▲0.0%

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