DXY Hits Seven-Week High as Fed Hike Odds Rise

The US Dollar Index (DXY) has surged to its highest level since late July, reaching 100.70 on Wednesday. This increase is largely attributed to the Federal Reserve's (Fed) stance on interest rates.

On September 16, the Fed raised rates and signalled at least one more increase this year. Since then, officials have consistently backed up this plan, solidifying expectations for another rate hike.

The case for a higher DXY is further supported by the recent developments in the oil market. A senior Iranian official reportedly stated that Iran would allow ships to pass through the Strait of Hormuz within a week, provided the US ends its blockade and stops military operations in the area.

This news led to a decline in Crude Oil prices, which in turn reduced inflationary pressures and increased the likelihood of another Fed rate hike. As a result, the DXY has benefited from this development, reaching a seven-week high on odds slightly better than even for an increase on October 28.