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Dollar Index slips for third straight day amid oil, inflation concerns

Traders using the CME FedWatch Tool are pricing about a 60% chance of a Fed rate hike, while upcoming PPI and CPI data could shift expectations ahead of the September meeting.

Reported · Written up by our desk · Major Pairs

The US Dollar Index, or DXY, which tracks the dollar against six major currencies, fell for a third consecutive day and was around 98.8 during Asian hours on Wednesday, according to FXStreet.

FXStreet attributed the dollar’s weakness to a tug of war between rising inflation concerns and Fed tightening expectations, noting that crude oil prices have climbed after a US strike on several Iranian tankers near Kharg Island. The higher oil price outlook has intensified worries about potential disruptions to global supplies, which in turn has supported rate hike expectations.

Even as the market leans hawkish, FXStreet said the downside for the greenback could be limited, with the CME FedWatch Tool showing traders pricing roughly a 60% chance of a Federal Reserve rate hike at the upcoming policy meeting. The focus later this week will be on US Producer Price Index and Consumer Price Index inflation releases that could clarify the Fed’s next steps ahead of September.

FXStreet also cited technical factors, saying the DXY spot level near 98.8 remains below the nine-period and 50-period exponential moving averages, while a 14-day relative strength index near 38 suggests lingering bearish pressure rather than an imminent reversal.

Latest closeWTI crude $94.28 ▲3.1%|Dollar index 98.84 ▼0.3%

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