US Dollar Forecast: DXY Slips Below 100 After Dovish Fed Signals Hit the Market

Dollar Loses Its Grip as Rate-Cut Fever Takes Hold

The U.S. Dollar Index spent the week under pressure, slipping from resistance at 100.25 to finish near 99.56. Buyers made several attempts to establish a foothold above 100, but each push stalled. Once weak consumer data and dovish Fed remarks hit the tape, sellers took control and the dollar couldn’t recover the handle.

Improving sentiment toward Europe — helped by geopolitical headlines and cheaper energy — added another layer of weight to the dollar as the euro picked up steady demand.

Soft Data and Dovish Signals Push Traders Into Cuts

Tuesday’s consumer confidence drop to 88.7 was the key spark. Every major component weakened, the Present Situation Index slipped, and fewer households saw jobs as “plentiful.” That sort of deterioration usually pulls rate expectations lower because it hints at fading demand. When traders expect the Fed to cut earlier, the dollar tends to lose altitude as its yield advantage compresses.

The Beige Book backed up the softness. Activity was described as little changed, but spending cooled outside upper-income buyers and employment dipped slightly. Those details tell traders the economy isn’t strong enough to justify a prolonged hold. Then Williams stepped in, saying further easing may be appropriate — the exact kind of comment that emboldens futures traders already looking for a reason to reload cut bets. Open interest and volumes surged as markets pushed December cut odds toward 80%.

Euro Finds a Tailwind From Peace Chatter and Cheaper Energy

The euro saw consistent buying after reports that Ukraine accepted a revised U.S. peace proposal. Traders liked the idea of progress, even if the details remain thin. Natural gas slipping below €30/MWh added another boost, improving Europe’s cost outlook. Because the DXY is heavily euro-weighted, even steady, moderate euro demand kept pressure on the index throughout the week.

Lower Yields Pull the Dollar Off Its Pedestal

As markets leaned into a December cut, Treasury yields eased. That undercuts the dollar because it reduces the return advantage of holding U.S. assets. Risk appetite also steadied enough to pull money out of defensive dollar positioning. Once yields stepped lower, sellers stayed in control.

Failed Break Above 100 Turns the Market Toward Sellers

Resistance at 100.25 held cleanly. After several failed pushes above 100, the index fell back and stayed there. The week’s range — 100.255 to 99.555 — shows how quickly sellers pressed once rate-cut expectations jumped. With price pinned near the lower end, momentum stayed with the bears.

Bias Stays Bearish While 100 Caps the Upside

Given the softer data, dovish Fed tone, and the inability to reclaim 100, the short-term outlook leans bearish. Unless yields firm up or confidence stabilizes, buyers may stay reluctant to test the ceiling again.

More Information in our Economic Calendar.