United States Dollar Index holds gains above 100.00 as Fed signals further tightening

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is extending its winning streak for the sixth successive day and trading around 100.30 during Asian hours on Thursday. The US Initial Jobless Claims data will be released later in the day.

The Greenback remains on a firm footing following an interest rate hike by the US Federal Reserve (Fed), alongside signals that another increase could follow before the end of the year. The central bank raised the federal funds rate by 25 basis points to a target range of 3.75% to 4.00%. The move matched market expectations, representing the Fed's first interest rate increase in three years.

In his post-meeting remarks, Fed Chair Kevin Warsh explained that the rate hike was driven by inflation remaining "too high" and lingering "for too long," describing the action as a "sober" and "responsible decision." Warsh signaled that further rate increases remain on the table in an effort to curb persistent price pressures. Following the announcements, money markets priced in roughly a 49.8% probability of another Fed rate hike at the October meeting, according to the CME FedWatch tool.

Fed’s Warsh underscores inflation fight as economy strength allows focus on price stability

Warsh’s press conference tone was distinctly hawkish, with the 7.4/10 FXS Speechtracker score modestly above the 7/10 historical average, signaling a firmer commitment to tightening policy relative to the established baseline. By stressing that “because of underlying strength of the economy we can afford to focus on price stability” and that “today we took a step toward delivering price stability,” the remarks framed the latest move as a deliberate removal of accommodation driven by persistent inflation trends rather than data noise. Emphasis on full employment, non-restrictive financial conditions, and the primacy of price stability reinforces a narrative that the FED is prepared to keep the pressure on inflation, a backdrop typically supportive of the Dollar and negative for risk-sensitive FX.

The FXS Fed Sentiment Index jumped by +26.07 points to 151.79, firmly in hawkish territory and consistent with the above-baseline FXS Speechtracker score. A reading this far above the neutral 100 mark signals that markets should interpret the decision and tone as a clear hawkish shift, with expectations for tighter policy and a stronger Dollar relative to lower-yielding peers.

Technical Analysis:

In the daily chart, Dollar Index Spot trades at 100.30. The near-term bias is bullish as price holds above both the 50- and nine-day Exponential Moving Averages (EMAs), suggesting a constructive recovery after the recent dip. The 14-day Relative Strength Index (RSI) at 63.58 is approaching overbought territory, hinting that buyers retain control but could face some fatigue if the index extends its advance too quickly, while the elevated FXS Fed Sentiment Index at 151.79 reinforces a supportive policy backdrop for the dollar.

On the downside, initial support is seen at the 50-day EMA at 99.69, followed closely by the shorter nine-day EMA at 99.64, forming a tight demand area that would need to give way to signal a deeper corrective phase. As long as the Dollar Index Spot holds above these moving averages, the technical structure favors further upside, with the psychological 100.00 area now acting as an intermediate floor rather than a cap in the current bullish setup.