Above 102.00: US Dollar Index Price Forecast remains bullish as gains hold

• 102.25 is the US Dollar Index’s level in early European trading on Thursday, with gains intact.
• 3.75% to 4.00% remains the benchmark federal funds rate range after the FOMC voted for a widely expected hold.
• December policy plans remain unclear after comments from the Fed’s Warsh.

102.25 is the current level of the US Dollar Index (DXY). The gauge measures the US Dollar (USD) against a basket of six world currencies. In Thursday’s early European session, the DXY is advancing after the Federal Reserve (Fed) kept interest rates unchanged at its October policy meeting, as expected. Attention now turns to Friday’s release of the US September Personal Consumption Expenditures (PCE) inflation report.

By a 10-2 vote, the Federal Open Market Committee (FOMC) maintained the benchmark federal funds rate within a 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.

Incoming data would, policymakers hoped, provide a basis for their next decision. According to the CME FedWatch tool, traders assign an 83.3% probability to a December rate rise.

Further DXY gains could nevertheless be limited by Fed Chairman Kevin Warsh's press conference. Although he gave no guidance on the outlook, Warsh acknowledged that price stability had yet to be achieved by the central bank. "We're working on it," he said.

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," adding: "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,”

December rate hike remains in play, supporting Dollar after Fed pause

A widely expected pause after September’s rate increase left the fed funds rate at "3.75–4.00%", analysts at MUFG/BTMU observe. The vote was split, however, with "two dissents in favour of another rate increase." In their assessment, Fed Chair Warsh "reiterated the Fed’s commitment to returning inflation to 2%" and stressed "the continued strength of the US economy," supporting expectations that tightening may not yet be over. Markets "continue to price around an 87% probability of a December rate hike," MUFG/BTMU add. Warsh also signalled a structural change to the policy calendar: the Fed will "only vote in seven policy meetings in 2027 and six in 2028, down from eight currently."

2% inflation commitment from Warsh sustains Dollar bulls

A 7/10 FXS Speechtracker score, matching the established baseline, places Warsh’s press conference firmly on the hawkish side. It points to continuity, not a change of regime. His emphasis that “ensuring price stability is not about a fixed date on a calendar”, alongside references to “new monetary medicine” and September’s withdrawal of accommodation, signals a determined but data-dependent approach to suppressing inflation and achieving the 2% PCE target. Despite an unsettled global backdrop, confidence that inflation expectations are “going the right way” and that policy is effective sustains a consistent hawkish bias that supports the Dollar.

A +14.39-point jump took the FXS Fed Sentiment Index to 141.89, extending its move into hawkish territory far above the neutral threshold of 100. The increase confirms the speech’s tightening bias. Together with the unchanged 7/10 FXS Speechtracker score, the elevated reading suggests markets should keep pricing a firm anti-inflation stance. That carries implications for higher US yields and a favourable environment for the Dollar against the Euro and Yen.

100-day SMA underpins Dollar Index Spot: Technical Analysis

Holding above the 100-day simple moving average (SMA) and the Bollinger Bands’ middle line keeps Dollar Index Spot’s near-term daily chart bias bullish. Prices are moving into the upper half of the Bollinger envelope, where the upper band provides the immediate ceiling. At about 60, the Relative Strength Index (14) remains supportive without signalling overbought conditions.

The Bollinger upper boundary at 102.60 provides the first upside resistance, 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 downside support sits around 102.05 at the Bollinger middle band. Below it lie the lower Bollinger boundary near 101.50 and the 100-day SMA at 100.65. Sustained selling beneath the latter could bring the psychological 100.00 level into view.

(The technical analysis of this story was written with the help of an AI tool. Know more.)