Dollar Index Climbs as Fed Rate Hike Expectations Rise

The US Dollar Index (DXY) has maintained its positive bias for four consecutive days, reaching near a two-week high of 99.65 during the early European session on Tuesday.

This upward momentum is partly driven by investors pricing in a higher chance of interest rate hikes from the Federal Reserve at their upcoming policy meeting, starting later today.

The analysts at Danske Bank have revised their Fed call, now expecting a 25-basis-point hike on Wednesday's meeting. They also predict two more 25-basis-point increases at the December and March meetings, taking the Fed Funds rate to 4.25-4.50% by the end of 2027.

From a technical perspective, the DXY is approaching a key confluence zone around 99.80, which includes both the 38.2% Fibonacci retracement level and the 100-day Simple Moving Average (SMA).