US Dollar Soars to Seven-Week High on Hawkish Fed Outlook

The US Dollar (DXY) has reached a seven-week high, supported by the Federal Reserve's (Fed) hawkish interest rate hike and rising Treasury yields. The DXY index trades around 100.40, on track to register a weekly gain of over 1%. Technical analysis shows that the index holds above all major daily Simple Moving Averages (SMAs), keeping the bullish bias intact.

The 61.8% Fibonacci level at 100.46 acts as immediate resistance, with the Relative Strength Index (RSI) nearing overbought territory. The technical setup favors further gains above 100, according to analysts at UOB Group. They expect two additional Fed rate hikes in Dec 2026 and 1Q 2027, followed by a period of stability.

UOB notes that their previously bearish USD bias is now being reassessed in light of the latest FOMC developments. The bank stresses that the Fed does not typically stop at one interest rate hike, and that two more hikes are likely to come before a pause. This shift implies that narrowing US rate differentials relative to G-10 peers will reverse and underpin the DXY going forward.