US Dollar Forecast: DXY Climbs as Safe-Haven Demand Offsets Rising Rate Cut Bets

DXY Tightens Its Grip on the Highs as Rate Cut Bets Surge Again

The U.S. Dollar Index is pushing toward the session high at 100.395 after recovering from early pressure, with buyers leaning into a stronger tape even as talk of a December “rate cut” intensifies. The rebound reflects firm demand for the dollar at a time when traders are reassessing policy expectations and repositioning after a volatile week.

The index is holding above the 200-day moving average at 99.885 for a third straight session, reinforcing short-term momentum. The 50-day moving average continues to steer the main trend, though its precise level was not provided.

At 16:26 GMT, DXY is trading 100.319, up 0.107 or +0.11%.

Fed Signals Rebuild Interest as Markets Reprice the Path Ahead

New York Fed President John Williams reinforced the possibility of another adjustment, stating that policy has become “somewhat less so” in terms of restrictiveness after the cuts delivered earlier this year.

He added that bringing the stance closer to neutral is appropriate, prompting traders to lift the probability of a December “rate cut” to above 70%, up sharply from less than 40% the previous session.

Rate-cut expectations typically reduce dollar appeal by lowering relative returns, yet DXY strength shows that positioning and broader risk conditions are still attracting buyers.

Labor data offered mixed signals. Nonfarm payrolls showed stronger job creation, while unemployment rose to 4.4%, the highest since October 2021. The conflicting picture limited conviction in dollar selling, keeping flows balanced.

Cross-Currency Moves Add Fuel to Dollar Positioning

The yen pulled higher to 156.41 per dollar after Japanese officials intensified verbal intervention. Finance Minister Satsuki Katayama stressed that direct action remains possible, keeping traders attentive to potential yen support. Intervention risk can check dollar buying in yen pairs, but the move did not spill into broad dollar weakness.

The euro eased to $1.1503 after PMI data showed steady activity but a manufacturing contraction. Sterling hovered near $1.3081 ahead of next week’s budget. Persistent softness in the Australian and New Zealand dollars on risk-off positioning continued to support the broader dollar basket.

Yields Pull Back but Haven Demand Keeps the Dollar Supported

U.S. yields slid, with the 10-year at 4.065% and the 2-year at 3.505%. Lower yields normally restrict dollar momentum, but Thursday’s equity pressure and revived uncertainty on the December decision preserved defensive demand for the greenback.

Technical Levels Shape the Near-Term Trade

DXY continues to test 100.395. A clean break above this level would expose 101.977, the May 12 top. Price remains above the 200-day moving average at 99.885, keeping buyers in control. The 50-day moving average guides the main trend direction, though no specific level was provided.

Market Forecast Conclusion

With cross-currency support, haven demand, and firm footing above the 200-day moving average, the short-term outlook remains bullish, contingent on a decisive break through 100.395. A failure to sustain the rally over the 200-day MA will shift momentum to the downside.

More Information in our Economic Calendar.