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US Dollar Index nears its yearly peak on hawkish Fed outlook

The DXY last traded around 101.4, up 0.2% on the day, after the Fed raised rates earlier this month and set a median policy-rate path at 4.1% for 2024.

Reported · Written up by our desk · Major Pairs

The US Dollar Index, which tracks the greenback against a basket of six major currencies, extended gains on Tuesday and moved close to its year to date high on expectations that the Federal Reserve could deliver additional interest-rate hikes, according to FXStreet.

FXStreet said the DXY was trading around 101.40, up 0.2% for the day. The outlet also linked the move to the Fed’s earlier 25 basis point hike, which lifted the federal funds target range to 3.75% to 4.00%, and to the Fed’s updated Summary of Economic Projections, where the median policy rate was set at 4.1% for the year.

The story added that the Fed remains focused on inflation above its 2% target, while oil prices stay elevated as the war in the Middle East continues. FXStreet also pointed to disrupted shipping through the Strait of Hormuz due to tensions between the United States and Iran, alongside recent Fed communication suggesting officials are open to further tightening.

FXStreet cited remarks from Fed Governor Michael Barr noting that inflation remains a key concern and that the central bank has been considering the case for additional policy tightening. The outlet said these expectations helped support demand for the US dollar.

Latest closeDollar index 101.25 ▲0.3%

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