US Dollar Forecast: DXY Gains as Treasury Yields Rise Ahead of Jackson Hole

Dollar creeps higher into mid-session as yields offer support

The US Dollar Index (DXY) is trading firmer on Monday, pulling back just a touch from intraday highs but still holding near 98.13 — up 0.29% on the day.

Dollar strength is mostly riding the tailwind of higher Treasury yields and a cooling in September rate cut bets as traders shift focus to upcoming Fed commentary out of Jackson Hole.

At 15:39 GMT, the U.S. Dollar Index is trading 98.082, up 0.243 or +0.25%.

Trump’s Ukraine Talks Add Geopolitical Weight

There’s a geopolitical layer to today’s move too. With President Trump hosting Ukrainian President Zelenskiy and a cadre of European leaders in Washington, traders are eyeing possible developments in efforts to end the Russia-Ukraine war.

Any resolution talks, especially those involving NATO security guarantees, may reframe risk sentiment and safe haven flows. That being said, the dollar’s gain so far seems more linked to rate repricing than Ukraine headlines — at least for now.

Yields Edge Up, Cutting Into September Rate Cut Odds

Yields across the curve are grinding higher — 10s are at 4.35%, 2s at 3.77%, and the long bond at 4.95%. That’s giving the dollar a floor here. Markets were leaning heavily into a September cut just a few days ago, but sticky producer price inflation has cooled that enthusiasm. Fed fund futures now show an 85% chance of a cut, down from fully pricing it in last week.

Bottom line: Powell hasn’t shown any urgency to ease, and with labor market data soft but not collapsing, he may still play it cautious.

Key Levels to Watch: Resistance at 98.95 and 99.32, Support at 97.62

Technically, the DXY is still trading below the 50-day SMA at 98.10, which it’s hovering around today. The recent bounce off 97.626 is helping build a floor, with 97.109 and the July low at 96.377 serving as deeper support.

On the upside, 99.320 is the first real ceiling, followed by the early August high at 100.25. Any break through 99.32 could trigger a test of that high — but that feels like a stretch ahead of Powell’s speech.

Looking Ahead: Powell Holds the Keys at Jackson Hole

It doesn’t take much imagination to see how this week sets up as a wait-and-see for Powell. With the Fed minutes dropping Wednesday and Powell speaking Friday, traders are more likely than not to stay sidelined in the near term.

The Fed chair may keep his cards close, especially with August jobs and CPI still to come. But any hint of dovishness could put 97.00 back on the radar, while a firm inflation-first tone might light a fire under the dollar.

For now, I’m keeping an eye on whether DXY can overcome the 50-day — that’s going to tell us whether buyers on dips still have any conviction.

More Information in our Economic Calendar.