US Dollar Forecast: DXY Steadies Ahead of Fed Minutes and NFP Release

Dollar Holds Firm as Traders Wait for Fresh Catalysts

The U.S. Dollar Index is trading in a tight pocket early Tuesday, stuck between upcoming catalysts and light participation as traders wait for Wednesday’s Fed minutes and Thursday’s September NFP release.

The index is still boxed in by the 200-day moving average at 99.995 and supported by the 50-day at 98.606, with price leaning slightly higher after drifting above the midpoint at 99.306. Until fresh data hits, that midpoint is the battleground where buyers and sellers are feeling each other out.

At 15:31 GMT, DXY is trading 99.406, down 0.127 or -0.13%.

Fed Uncertainty and Shutdown Delays Keep Dollar Traders on Edge

The broader dollar tone reflects a market hesitating rather than retreating. Investors are watching U.S. releases that were delayed by the 43-day shutdown, and that backlog alone is enough to keep traders from taking size. The key event is Thursday’s NFP print — backward looking, yes, but still critical because it covers the period when the Fed resumed its easing cycle and Powell leaned dovish at Jackson Hole on labor conditions.

Fed-speak isn’t helping clarity. Governor Waller is still making the case for more cuts, while Vice Chair Jefferson is calling for slower steps. That divide matters for the DXY because any sign of deeper policy easing would generally pressure the dollar through lower relative yields, while caution from leadership limits that downside.

Money-market pricing captures that indecision: odds of a December 25-bp cut are sitting near 50%, down from 60% a week earlier. That softening shows the market stepping back from aggressive easing bets, which adds a mild cushion under the dollar.

Yen Weakness and Fiscal Concerns Funnel Support Toward the Dollar

The yen hit a fresh 9½-month low before bouncing, but the broader read is that Japan’s policy backdrop still leans against the currency. Takaichi’s push for heavy fiscal stimulus and the risk of more debt issuance keep pressure on JGBs and, by extension, the yen.

Even with Ueda hinting at possible rate hikes, traders aren’t ready to buy that story in size. Intervention chatter is rising, but there’s no sign officials are ready to pull the trigger.

These cross-currents keep USD/JPY firm, and while the DXY doesn’t track the yen as heavily as the euro, constructive USD/JPY flow helps keep the index supported.

Softer Yields Look Like Positioning Rather Than a Turn in Sentiment

U.S. Treasury yields eased, with the 10-year near 4.10% and the 2-year at 3.566%. Lower yields can weigh on the dollar, but today’s move looks more like pre-data positioning than a turn in conviction. Equities are softer globally, especially tech, but FX has barely reacted — a sign traders aren’t rushing into defense just yet.

DXY Locked Between Major Moving Averages With the Midpoint Driving the Tape

The key levels remain unchanged: support at the 50-day (98.606), resistance at the 200-day (99.995). Price sitting just above 99.306 — the midpoint between those averages — shows buyers probing, but no breakout yet. Until one side forces a move through either the floor or the ceiling, short-term direction hinges on reactions around that midpoint.

Mild Bullish Lean Holds, but the Real Break Waits for NFP

Short-term bias stays mildly bullish, with the dollar holding above the midpoint and easing expectations for aggressive cuts helping keep buyers active. But without a catalyst, the index will likely chop between its moving averages until NFP provides the next push.

More Information in our Economic Calendar.