Dollar Index Trapped at 100 as Hawkish Fed Meets Official Selling

The US Dollar Index (DXY) trades near 100.02 on Tuesday after last week's sharp rejection from 101.50. The greenback is battling to reclaim the psychological 100 mark, according to Trading Economics data.

Markets price roughly 55% odds of a September Federal Reserve rate hike. At the same time, coordinated currency intervention and falling oil prices pull the index in the opposite direction.

Fed Hike Bets Collide With Yen Intervention

Fundamentals have turned dollar-friendly on the monetary policy side. July's ISM Manufacturing Purchasing Managers Index (PMI) jumped to 55.6, its strongest reading since May 2022.

Three Federal Open Market Committee (FOMC) members also dissented in favor of a hike in July, when rates held at 3.50% to 3.75%. Prediction market Kalshi prices a 25-basis-point September hike at 53%, with CME FedWatch showing similar odds.

However, official pressure works against the dollar. The US and Japan confirmed coordinated yen intervention after USD/JPY weakened to 40-year lows near 164.

… Continue reading the full article at the original source below.