US Dollar: Fed guidance and PCE risks – DBS

FXStreet Insights Team FXStreet

DBS Group Research’s Philip Wee notes that the US Dollar (USD) has strengthened, with the US Dollar Index (DXY) at its highest since May 2025 after a hawkish Federal Open Market Committee (FOMC). He highlights that US exceptionalism is being questioned by an equity selloff and AI-related tech weakness. Wee flags tomorrow’s US Personal Consumption Expenditures (PCE) inflation release as a key risk for the Dollar’s current dominance.

DXY strength meets inflation test

"The DXY Index has risen by 1.3% to 101.41, its highest level since May 2025, following the hawkish FOMC meeting on June 16-17."

"However, the US exceptionalism narrative pushing this USD rally is not supported by the stock market rout amid Fed-hike worries."

"The futures market has priced in a 54.6% chance of a 25-bps hike to 4.00% at the September 16 FOMC meeting."

"This leaves the current setup vulnerable to any surprises in tomorrow’s PCE inflation print, where markets are aware that lower crude and pump prices have created a disinflationary veneer ahead on the headline front."

"By attempting to pre-commit to a policy trajectory, the Fed inadvertently breeds a market echo chamber that prices in rigid central bank promises rather than evolving economic fundamentals."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD clings to multi-day peaks below 1.3500

GBP/USD trades with marked gains on Friday, now giving away some gains following an earlier surpass of the key 1.3500 yardstick. Indeed, Cable gathers fresh steam amid the strong offered stance in the Greenback, all after US NFP badly missed expectations in July.

EUR/USD: Post-NFP bounce falters around 1.1580

EUR/USD reverses Thursday’s decline and trades with solid gains in the 1.1560 region, or two-month peaks, on Friday. The pair’s firm performance comes in a context of a sharp correction in the US Dollar as investors continue to assess disheartening US NFP readings.

How Wall Street rigs the game [Video]

In this week’s Live from the Vault, Andrew Maguire is joined by Peter Antico and Sean Stone to discuss the Paradigm of Money - an in-depth expose of financial market corruption, from naked shorting to the two-tier system that protects Wall Street.

XRP Price Forecast: XRP nears critical $1.00 support

Ripple (XRP) remains pressured on Friday, trading around $1.03 at the time of writing. The token appears to hold this current level as support but lacks a catalyst to sustain a knee-jerk rebound toward the next key resistance at $1.10.

Is Gold about to enter its biggest bull run since 2020?

Gold has stormed back into the spotlight and its next move could leave late buyers chasing. On August 5, the yellow metal surged almost 7% – roughly $174 – to close near $4,308 an ounce, posting one of its biggest daily advances in recent history. A weaker U.S dollar, falling Treasury yields, changing Federal Reserve expectations and renewed safe-haven demand all struck at once.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.