US Dollar Index Price Forecast: Fresh upside likely if it breaks above 99.40
- The US Dollar Index trades higher to near 99.18 as the Fed is unlikely to cut interest rates this year.
- Traders have priced out dovish Fed bets due to elevated oil prices.
- Investors await FOMC minutes for fresh cues on the US interest rate outlook.
The US Dollar (USD) recovers on Tuesday after a sharp corrective move the previous day amid firm expectations that the Federal Reserve (Fed) will not cut interest rates this year.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.23% higher to near 99.18. The DXY corrected to near 98.94 on Monday after posting a fresh over five-week high at 99.41 the same day.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.22% | 0.26% | 0.14% | 0.06% | 0.52% | 0.35% | 0.17% | |
| EUR | -0.22% | 0.05% | -0.04% | -0.15% | 0.32% | 0.15% | -0.04% | |
| GBP | -0.26% | -0.05% | -0.11% | -0.20% | 0.25% | 0.11% | -0.08% | |
| JPY | -0.14% | 0.04% | 0.11% | -0.10% | 0.35% | 0.21% | 0.02% | |
| CAD | -0.06% | 0.15% | 0.20% | 0.10% | 0.45% | 0.30% | 0.12% | |
| AUD | -0.52% | -0.32% | -0.25% | -0.35% | -0.45% | -0.14% | -0.33% | |
| NZD | -0.35% | -0.15% | -0.11% | -0.21% | -0.30% | 0.14% | -0.19% | |
| CHF | -0.17% | 0.04% | 0.08% | -0.02% | -0.12% | 0.33% | 0.19% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
According to the CME FedWatch tool, the possibility of the Fed holding interest rates at their current levels by the year-end is 53%, while the rest favors at least one interest rate hike this year. This is a sharp turnaround from two interest rate cuts anticipated before the onset of the war in the Middle East.
Dovish Fed prospects have waned significantly as elevated oil prices due to restricted energy flows through the Strait of Hormuz have prompted United States (US) inflation expectations. The US Consumer Price Index (CPI) data showed last week that the headline inflation accelerated to 3.8% Year-on-Year (YoY), the highest level seen in almost three years.
For more cues on the Fed’s monetary policy outlook, investors will focus on the Federal Open Market Committee (FOMC) minutes of the April policy meeting, which will be released on Wednesday.
US Dollar Index technical analysis
The US Dollar Index Spot trades higher at around 99.18 at the press time. The near-term bias is mildly bullish as price holds above the 20-period Exponential Moving Average (EMA) at 98.63, suggesting buyers are regaining control after the recent rebound.
The Relative Strength Index (RSI) at 57.08 leans to the upside without yet signaling overbought conditions, hinting that positive momentum could support further gains while the current structure holds.
On the downside, immediate support is located at the 20-day EMA around 98.63, with the latest swing low zone below it acting as a broader demand area if a pullback develops. As long as the index sustains above this moving average, dips are likely to find buyers, keeping the broader recovery bias intact in the sessions ahead. Looking up, the DXY could extend its advance toward the April 8 high of 99.70 and the psychological level of 100.00, if it manages to break above the May 18 high of 99.41
(The technical analysis of this story was written with the help of an AI tool.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
