Dollar Firms on Tightening Expectations, CME FedWatch Points to Further Hikes

The US dollar started the week on a strong note as markets adjusted their expectations for further Federal Reserve tightening. The US Dollar Index (DXY) rose by 0.15% to around 100.37, while the CME FedWatch tool indicated an almost 88% chance of at least one more rate hike this year.

This repricing follows last week's decision to increase rates by 25 basis points to a 3.75%-4.00% range and signal further action. Minneapolis Fed President Neel Kashkari emphasized that elevated inflation remains a core policy concern, with his comments scoring 6.2 on the FXS Speechtracker versus a 6.3 historical average.

Technically, DXY traded above its 20-day exponential moving average (EMA) of 99.63, with an RSI of 63.15. According to some analysts, this could lead to further gains for the dollar, potentially reaching 1.2% to 1.5% before facing exhaustion.