US Dollar Index Price Forecast: Bullish bias stays intact as gains hold above 102.00

• Gains in the US Dollar Index hold near 102.25 as Thursday’s European session gets under way.
• In a widely anticipated decision, the FOMC voted to retain the benchmark federal funds rate within the 3.75% to 4.00% range.
• A December policy move remained unclear after remarks from the Fed’s Warsh.

Strength in the US Dollar Index (DXY) has kept it near 102.25 during early European trade on Thursday, following the Federal Reserve’s (Fed) widely expected decision to leave interest rates unchanged at its October policy meeting. The index tracks the value of the US Dollar (USD) against a basket of six world currencies. Attention now turns to Friday’s release of the US Personal Consumption Expenditures (PCE) inflation report for September.

By a 10-2 vote, the Federal Open Market Committee (FOMC) retained its benchmark federal funds rate in the 3.75% to 4% range. The two dissenters, Governor Lisa Cook and Cleveland Fed President Beth Hammack, favoured a 25 basis points (bps) rate increase.

With policymakers expressing hope that forthcoming data would guide their next decision, traders have assigned an 83.3% probability to a December rate hike, according to the CME FedWatch tool.

Further DXY gains could, however, be limited by Fed Chairman Kevin Warsh’s press conference. While offering no guidance on the outlook, Warsh acknowledged that the central bank had yet to secure price stability. Warsh said, "We're working on it,"

Carol Kong, a currency strategist at Commonwealth Bank of Australia, said: "Warsh's silence on further rate hikes was interpreted as dovish, or not hawkish enough," Carol added: "Some market participants might have expected him to pair the on-hold decision with a little bit of guidance on the December meeting, but he didn't do that,”

Can the Fed’s pause sustain Dollar support with a December hike still in play?

For analysts at MUFG/BTMU, the Fed’s decision to hold the fed funds rate at "3.75–4.00%" represented the widely expected pause after September’s increase. They point out that the vote was not unanimous, recording "two dissents in favour of another rate increase." Expectations that tightening may not yet be over were reinforced as Fed Chair Warsh "reiterated the Fed’s commitment to returning inflation to 2%" and emphasised "the continued strength of the US economy," the analysts note. According to MUFG/BTMU, markets "continue to price around an 87% probability of a December rate hike," while Warsh signalled a structural change to the policy calendar, saying the Fed will "only vote in seven policy meetings in 2027 and six in 2028, down from eight currently."

Will Warsh’s firm 2% inflation commitment sustain Dollar bulls’ interest?

Continuity, rather than a change in policy regime, characterises Warsh’s firmly hawkish press conference: the 7/10 FXS Speechtracker score matches the established baseline. His emphasis on “ensuring price stability is not about a fixed date on a calendar”, alongside references to “new monetary medicine” and September’s withdrawal of accommodation, points to a resolute, data-dependent effort to curb inflation and achieve the 2% PCE target. Despite an unsettled global backdrop, his confidence in policy effectiveness and inflation expectations “going the right way” maintains a steady hawkish bias that supports the Dollar.

A jump of +14.39 points took the FXS Fed Sentiment Index to 141.89, moving it further into hawkish territory and well beyond the neutral threshold of 100. The rise confirms the speech’s tightening bias. Together with the unchanged 7/10 FXS Speechtracker score, this elevated reading suggests markets should keep pricing in a firm stance against inflation, with implications for higher US yields and a supportive environment for the Dollar against the Euro and Yen.

Technical Analysis: Can Dollar Index Spot maintain its positive outlook above the 100-day SMA?

Holding above the 100-day simple moving average (SMA) and the Bollinger Bands’ middle line keeps the near-term outlook for Dollar Index Spot bullish on the daily chart. As prices push into the upper half of the Bollinger envelope, the upper band provides the immediate ceiling. Meanwhile, the Relative Strength Index (14), at around 60, remains in positive territory without yet indicating overbought conditions.

The upper Bollinger band at 102.60 marks the first resistance on the upside, ahead of the 14 October high of 102.94. A decisive daily close beyond that barrier would create scope for a move towards the 27 March 2025 high of 104.71.

Initial support lies around 102.05 at the middle Bollinger band. Below that, the lower Bollinger band near 101.50 precedes the 100-day SMA at 100.65. Sustained selling beneath this level could bring the psychological 100.00 mark into view.

(An AI tool assisted in preparing this story’s technical analysis. Learn more.)