US Dollar Index falls to near 101.50 amid Fed rate pause odds, easing safe-haven demand
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is losing ground after registering gains in the previous day and trading near 101.70 during Asian hours on Monday.
The Greenback is facing downward pressure due to market expectations surrounding the Federal Reserve’s upcoming policy path. Financial markets anticipate that the Fed will hold interest rates steady in October before potentially pursuing another rate hike in December. According to the CME FedWatch Tool, market pricing reflects a 90.6% probability of a rate pause at the October 27–28 policy meeting, alongside a 79.7% chance of a rate increase in December.
Brown Brothers Harriman’s Elias Haddad notes that the FOMC is widely expected to leave policy unchanged this week, with the Fed funds target range “steady at 3.75-4.00% after raising rates 25bps in September.” He points out that “calls for patience from several key Fed officials support a pause,” while the futures market “imply only 10% odds of a hike this week, with a December 9 rate increase virtually fully priced in.” Against a backdrop of firm US data and persistent inflation pressures, Haddad argues this stance continues to underpin the Dollar.
Investors are closely monitoring key US economic releases scheduled for this week, specifically the Personal Consumption Expenditures (PCE) inflation data and preliminary third-quarter GDP figures, to gauge future rate moves.
Simultaneously, the US Dollar is struggling as safe-haven demand eases following recent comments from US President Donald Trump. Citing reports from Al Jazeera, President Trump ruled out immediate military action against Iran, clarifying that "there will not be a strike today."
Despite this temporary pause, market anxiety remains elevated over the risk of strikes resuming after this week’s Israeli elections and next week’s US midterm elections. Intelligence reports indicate that Iran is prepared to retaliate by targeting key regional sites in Israel and the United Arab Emirates should military operations restart.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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