US Dollar Reaches Six-Week High Amid Fed Rate Hike Expectations
The US Dollar (USD) has seen significant gains this week, reaching its highest level in six weeks. The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, is trading firmly near 100.27 at press time.
This uptrend can be attributed to the Federal Reserve's (Fed) decision to raise interest rates by 25 basis points (bps) to the 3.75%-4.00% range. As a result, traders have repriced interest rate expectations, further supporting the US Dollar.
According to the CME FedWatch tool, the odds of the Fed delivering at least one more interest rate hike have increased to 88% from 66.3% seen a week ago. The Fed's dot plot showed that 16 out of 18 Federal Open Market Committee (FOMC) members see at least one interest rate hike in the remaining year.
Next week, investors will focus on the preliminary US S&P Global Purchasing Managers' Index (PMI) data for September. The technical analysis suggests that the near-term bias is bullish as price consolidates over reclaimed trend support.