DXY Nears Yearly High on Hawkish Fed Outlook

The US Dollar Index (DXY) has extended its gains on Tuesday, nearing its year-to-date high as expectations of further Federal Reserve interest-rate hikes drive strong demand for the Greenback. At present, the DXY trades around 101.40, up 0.20% on the day.

The Fed delivered a 25-basis-point rate hike earlier this month, raising the federal funds target range to 3.75%-4.00%. The updated Summary of Economic Projections places the median policy rate at 4.1% for this year, suggesting that officials expect one more increase.

Fed Governor Michael Barr emphasized that 'inflation is a key concern', and the central bank has been 'knocked off course' from its 2% goal. He added that unless they adjust their policy, they won't meet the target in a timely way.