Dollar Slips Despite Rate Hike Bets Amid Rising Oil Prices

The US Dollar Index (DXY) has been declining for three consecutive days, despite expectations of a Federal Reserve rate hike. The DXY measures the value of the US dollar against six major currencies and was trading around 98.80 during Asian hours on Wednesday.

Rising oil prices have intensified inflation concerns and strengthened expectations for a Fed rate hike. Crude oil prices climbed following a US strike on several Iranian tankers, which has heightened geopolitical tensions and stoked market concerns about potential disruptions to global oil supplies.

Economists at National Bank of Canada acknowledge that the Fed may raise its policy rate for the first time since 2023, which would put a floor under the greenback. However, they caution against over-interpreting recent data and market moves, pointing out that shifting narratives can quickly cloud the underlying policy outlook.

The technical analysis shows that the Dollar Index Spot trades at 98.80, extending a bearish near-term bias as price holds beneath both the nine-period Exponential Moving Average (EMA) at 99.07 and the 50-period EMA at 99.69.