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Dollar tests yearly highs near 102.50 as Fed hike odds fade
The Dollar’s rise is being scrutinized as softer US data reduces expectations for an October 28 FOMC rate hike, while high long term Treasury yields remain a key support.
The US Dollar Index (DXY) is testing fresh yearly highs around the 102.50 zone, with the move supported by weakness in the euro and a still resilient view of the Federal Reserve’s rate path, according to FXStreet.
FXStreet notes that expectations for an October rate hike are fading after softer inflation and payrolls data, prompting strategists to reassess what is driving the Greenback’s momentum.
The outlet also highlights that elevated US Treasury yields continue to provide broad support, even as analysts are split on whether rising term premia and upcoming US midterm election risks could slow the dollar’s advance.
FXStreet attributes caution to Philip Wee at DBS Group Research, who said the rally is losing monetary policy momentum as senior Fed officials have pushed back against a rate hike at the October 28 FOMC meeting.
Latest closeDollar index 101.92 ▼0.2%