Dollar Index Soars Above Six-Week High Amid Hawkish Fed Bets

The US Dollar Index has been trading firmly above 100.00 as it approaches the weekend. This level marks the highest point seen in the last six weeks, and experts attribute this surge to the Federal Reserve's decision to raise interest rates by 25 basis points (bps) to the 3.75%-4.00% range.

This move has led traders to reprice interest rate expectations, with the odds of another hike increasing to 88% from 66.3% a week ago, according to the CME FedWatch tool.

The Federal Reserve's dot plot shows that 16 out of 18 members see at least one more interest rate hike in the remaining year, further supporting hawkish bets. Additionally, Fed Chairman Kevin Warsh emphasized the need for higher rates due to 'inflation being too high and has been for too long.'

The US Dollar Index technical analysis suggests that the near-term bias is bullish, with price consolidating above reclaimed trend support. The 20-day exponential moving average (EMA) at 99.56 serves as initial support on any pullback.