101.45 area: US Dollar Index price forecast as index sets new three-week low

101.45 marks a fresh three-week low for the US Dollar Index as US bond yields soften.
Softer housing market conditions weigh on US Treasury yields.
Q3 results beat expectations at Meta, with AI spending guidance raised slightly.

Lower United States (US) bond yields weigh on the US Dollar (USD). The currency trails its major peers as housing market conditions soften.

101.45 is the fresh three-week low reached by the US Dollar Index (DXY) during Thursday’s European session. The index measures the Greenback against six major currencies. The 10-year US Treasury yield stands near 5.07%, down 0.7%.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Soft US housing figures support demand for duration

September’s housing figures helped underpin the earlier fall in yields, according to analysts at Deutsche Bank, who describe the move as "supported by soft housing data for September,". They cite housing starts of "‑5.2% vs +1.9% exp." and "a sharp slowing in pending home sales," with "their annual growth" down "to its lowest since 2023 at ‑12.6% yoy." In their assessment, the softer housing picture has reinforced modest demand for duration at the long end of the US yield curve.

Meta’s renewed commitment to substantial Artificial Intelligence (AI) infrastructure spending appears to be easing concerns about AI-driven growth.

Deutsche Bank analysts point to a rise of more than “+2% in after-hours trading,” in Meta shares following a Q3 revenue beat of “$64.6bn vs $63.3bn est.” The company’s Q4 guidance was “towards the upper end of expectations” at “$73-76bn vs $73.6bn est.” Meta also “slightly boosted its 2026 capex plan from a $130bn-145bn range to $135bn-145bn,” Deutsche Bank notes, highlighting its sustained commitment to AI investment.

101.52: US Dollar Index Technical Outlook

101.52 is the level for Dollar Index Spot on the daily chart. Trading just below the 20-day Exponential Moving Average (EMA) at 101.65 but above the 38.2% Fibonacci retracement at 101.26, the index retains a neutral near-term bias. This positioning points to consolidation following the recent rise. At around 51, the Relative Strength Index (14) signals fading directional conviction, with neither buyers nor sellers clearly in command.

The 20-day EMA at 101.65 presents the first upside barrier, ahead of the 23.6% Fibonacci retracement at 101.89. A sustained move through both would clear a path towards the recent swing high near the 0.0% retracement at 102.91. Support starts at the 38.2% retracement at 101.26. Below that, 100.75 and 100.24 correspond to the 50.0% and 61.8% retracements. A deeper decline would bring the 78.6% level at 99.52 into view, followed by the base of the current Fibonacci range near 98.60.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

US Dollar: Key Questions

US Dollar: Currency Role and Global Use

The official currency of the United States of America, the US Dollar (USD) also circulates alongside local banknotes as the ‘de facto’ currency in a significant number of other countries. No currency is traded more widely. Data from 2022 show that it accounts for over 88% of global foreign exchange turnover, equivalent to average daily transactions of $6.6 trillion. After the Second World War, the USD replaced the British Pound as the world’s reserve currency. Gold backed the US Dollar through most of its history, until the Bretton Woods Agreement in 1971 brought the Gold Standard to an end.

Federal Reserve Decisions: Effects on the US Dollar

Monetary policy is the single strongest influence on the US Dollar’s value. The Federal Reserve (Fed) sets that policy under two mandates: maintaining price stability by controlling inflation, and promoting full employment. Interest rate adjustments are its main means of meeting both objectives. If prices climb too rapidly and inflation exceeds the Fed’s 2% target, the central bank will raise interest rates, supporting the USD. Conversely, inflation below 2% or an excessively high Unemployment Rate may prompt the Fed to cut rates, putting pressure on the Greenback.

Quantitative Easing: How It Affects the US Dollar

Printing additional Dollars and introducing quantitative easing (QE) are further options available to the Federal Reserve in extreme circumstances. Through QE, the Fed sharply expands the supply of credit within a stalled financial system. This unconventional policy addresses a credit drought caused by banks refusing to lend to one another for fear of counterparty default. It is a last resort when interest rate cuts alone are unlikely to deliver the required outcome. During the Great Financial Crisis in 2008, QE was the Fed’s preferred response to the credit crunch. The process entails printing more Dollars to purchase US government bonds, mainly from financial institutions. The US Dollar typically weakens as a result.

Quantitative Tightening: Implications for the US Dollar

By contrast, quantitative tightening (QT) reverses this process. The Federal Reserve ceases bond purchases from financial institutions and refrains from reinvesting principal repaid on maturing bonds in fresh purchases. This generally supports the US Dollar.