Dollar at Crucial Resistance Ahead of Fed Decision

The US Dollar Index is testing key resistance near 102 as the Federal Reserve prepares to make its decision on interest rates. The dollar has recovered from its selloff in 2025, but it remains within a broader price range.

A sustained break above 102 would confirm a stronger momentum and open the way for a broader extension of the dollar recovery. However, a surprise rate increase or a strongly hawkish hold is needed to support this scenario.

The Fed faces two opposite risks: if it waits too long and the energy shock spreads into broader inflation, it could lose control over price expectations; but if it raises rates while the labour market is already losing momentum, it could deepen the slowdown in the US economy.