US Dollar Index Price Forecast: Bullish bias persists as gains hold above 102.00

• At around 102.25, the US Dollar Index remains in positive territory early in Thursday’s European session.
• As widely anticipated, the FOMC left its benchmark federal funds rate within the 3.75% to 4.00% range.
• No clear guidance on a December policy move emerged from the Fed’s Warsh.

Following the Federal Reserve’s (Fed) widely expected decision to leave interest rates unchanged at its October policy meeting, the US Dollar Index (DXY) is strengthening, trading close to 102.25 early in Thursday’s European session. The index tracks the US Dollar (USD) against a basket of six world currencies. Attention now turns to Friday’s release of the US Personal Consumption Expenditures (PCE) inflation report for September.

A 10-2 vote by the Federal Open Market Committee (FOMC) kept the benchmark federal funds rate in the 3.75% to 4% range. The dissenters, Governor Lisa Cook and Cleveland Fed President Beth Hammack, favoured a 25 basis point (bps) rate increase.

Incoming economic data would, policymakers said, hopefully help shape their next decision. According to the CME FedWatch tool, traders assign an 83.3% probability to a December rate rise.

Further gains in the DXY could, however, be constrained by Fed Chairman Kevin Warsh’s press conference. Although he gave no guidance on the outlook, Warsh acknowledged that price stability had yet to be achieved by the central bank. "We're working on it," he said.

Carol Kong, a currency strategist at Commonwealth Bank of Australia, said: "Warsh's silence on further rate hikes was interpreted as dovish, or not hawkish enough," adding: "Some market participants might have expected him to pair the on-hold decision with a little bit of guidance on the December meeting, but he didn't do that,”

Dollar remains supported as Fed pause leaves December rate rise in contention

Following September’s rate rise, the Fed delivered the broadly expected pause, leaving the fed funds rate at "3.75–4.00%", analysts at MUFG/BTMU observe. They note that the vote was not unanimous, with "two dissents in favour of another rate increase." Expectations that tightening may not yet be over were reinforced by Fed Chair Warsh, who "reiterated the Fed’s commitment to returning inflation to 2%" and emphasised "the continued strength of the US economy," the analysts say. Markets "continue to price around an 87% probability of a December rate hike," MUFG/BTMU add. They also point to Warsh’s indication of a structural change to the policy calendar: the Fed will "only vote in seven policy meetings in 2027 and six in 2028, down from eight currently."

Dollar bulls retain interest as Warsh reaffirms commitment to 2% inflation

An unchanged FXS Speechtracker score of 7/10 places Warsh’s firmly hawkish press conference tone in line with the established baseline, signalling continuity rather than a change of regime. His emphasis on “ensuring price stability is not about a fixed date on a calendar”, alongside references to “new monetary medicine” and September’s withdrawal of accommodation, points to a resolute, data-dependent approach to curbing inflation and achieving the 2% PCE target. Despite an unsettled global backdrop, confidence in policy effectiveness and in inflation expectations “going the right way” sustains a consistently hawkish bias that supports the Dollar.

A rise of +14.39 points took the FXS Fed Sentiment Index to 141.89, further into hawkish territory and comfortably above the neutral threshold of 100, confirming the speech’s tightening bias. Together with the steady 7/10 FXS Speechtracker score, this elevated reading suggests that markets should keep pricing in a firm anti-inflation stance. The implications are for higher US yields and a favourable environment for the Dollar against the Euro and Yen.

Technical Analysis: Dollar Index Spot holds bullish bias above 100-day SMA

Holding above the 100-day simple moving average (SMA) and the middle line of the Bollinger Bands keeps the near-term outlook for Dollar Index Spot bullish on the daily chart. Trading is pushing into the upper half of the Bollinger envelope, where the upper band provides the immediate ceiling. Meanwhile, a Relative Strength Index (14) reading of around 60 remains supportive without yet indicating overbought conditions.

The upper Bollinger band at 102.60 provides the first resistance, ahead of the 14 October high at 102.94. If the index closes decisively above that barrier on a daily basis, the way would be open towards 104.71, the high recorded on 27 March 2025.

Initial support lies around 102.05 at the middle Bollinger band. Below that, the lower band near 101.50 comes into view, followed by the 100-day SMA at 100.65. Sustained selling beneath this level could bring the psychological 100.00 mark into focus.

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