US Dollar Index Price Forecast: Hawkish Fed pricing backs more upside above 102.20

The US Dollar Index edges lower to near 101.88; however, the outlook remains strong.
Investors await the US NFP data for September releasing at 12:30 GMT.
The Fed is expected hike interest rates further by 100 bps in one-year timeframe.

The US Dollar (USD) trades marginally lower on Friday ahead of the United States (US) Nonfarm Payrolls (NFP) data for September at 12:30 GMT. In the early European trade, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades marginally lower to near 101.88, but is still close to its over-a-year high of 102.20 posted on Thursday.

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

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Euro.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		1.09%	0.16%	0.17%	0.51%	1.09%	0.80%	-0.12%
EUR	-1.09%		-1.00%	-0.83%	-0.60%	-0.01%	-0.30%	-1.21%
GBP	-0.16%	1.00%		-0.06%	0.35%	0.94%	0.64%	-0.27%
JPY	-0.17%	0.83%	0.06%		0.22%	0.83%	0.52%	-0.41%
CAD	-0.51%	0.60%	-0.35%	-0.22%		0.62%	0.27%	-0.61%
AUD	-1.09%	0.00%	-0.94%	-0.83%	-0.62%		-0.30%	-1.21%
NZD	-0.80%	0.30%	-0.64%	-0.52%	-0.27%	0.30%		-0.90%
CHF	0.12%	1.21%	0.27%	0.41%	0.61%	1.21%	0.90%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

The US NFP report is expected to show that the economy created 90K fresh jobs, lower than 162K in August, with the Unemployment Rate remaining steady at 4.1%. The data will likely have a significant impact on Federal Reserve’s (Fed) interest rate expectations.

Meanwhile, traders remaining increasingly confident that the Fed will deliver more interest rate hikes in the near term is providing strength to the US Dollar.

Strategists at Brown Brothers Harriman (BBH) note that "USD is up across the board, with the DXY index making new cyclical highs," underpinned by a resilient US backdrop. They point to "resilient US economic activity, improving labor demand, and sticky inflation" as key factors that "back the nearly 100bps of Fed funds rate hikes priced over the next twelve months," reinforcing the constructive tone toward the Dollar.

Higher hawkish Fed expectations have boosted US Treasury Yields. In the European trade on Friday, 10-year US Treasury Yields are flat at around 5.25% but are still close to its over two-decade high of 5.34% posted the previous day.

US Dollar Index Technical Analysis

In the daily chart, Dollar Index Spot trades at 101.88. The index holds above the 20-day exponential moving average (EMA) at 100.70, which keeps the near-term bias bullish as price extends its advance away from this dynamic floor. The Relative Strength Index (14) at 73.18 sits in overbought territory, hinting that the latest breakout is stretched but not yet reversed.

On the downside, initial support is seen at the 20-day EMA at 100.70. Looking up, the fresh annual high at 102.20 is the immediate resistance; above that the 10 April 2025 high at 103.03 would be the key hurdle.

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

US Dollar FAQs

What is the US Dollar?

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

How do the decisions of the Federal Reserve impact the US Dollar?

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

What is Quantitative Easing and how does it influence the US Dollar?

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

What is Quantitative Tightening and how does it influence the US Dollar?

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.

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