US Dollar Forecast: DXY Weakens Under 50-Day SMA Ahead of Key PCE Inflation Data

Dollar Held Below 50-Day SMA as Fed Cut Bets Strengthen

The US Dollar Index (DXY) is trading near 97.861 on Thursday, holding below key resistance as traders raise the odds of a Federal Reserve rate cut next month. Comments from New York Fed President John Williams reinforced a data-dependent stance, with markets now pricing in an 89% chance of a 25 basis point cut at the September 16–17 meeting, according to LSEG data. A total of 55 basis points of easing is priced in by year-end.

Fed Outlook Hinges on PCE and Jobs Data

Williams told CNBC the Fed could lower rates but emphasized the decision depends on the upcoming economic releases. Friday’s core PCE price index—considered the Fed’s preferred inflation gauge—and next week’s payrolls report are now in sharp focus. The Fed’s message has been consistent: each meeting is live, and no move is pre-committed. Still, short-term yields have pulled back as traders bet on a near-term pivot.

White House Pressure Undermines Dollar Support

Traders remain cautious as political interference clouds the Fed’s credibility. President Trump’s effort to remove Governor Lisa Cook and install an ally on the Fed board has triggered legal pushback and renewed questions over central bank independence. Trump claims he’s close to having a majority of his appointees on the board—potentially tilting policy more dovish regardless of economic conditions. That narrative has added pressure to short-end yields and the dollar.

DXY Fails at 50-Day Average, Bearish Bias Maintained

The DXY continues to trade below its 50-day simple moving average, currently marked at 98.000. Repeated intraday attempts to break this level in August have failed, confirming it as a key resistance zone. As long as price holds beneath the 50-day, momentum favors the downside. There is no confirmation of a trend reversal unless the index reclaims and closes above this level.

Market Forecast: PCE to Set Near-Term Direction

With the index unable to clear 98.000 and political pressure lingering, traders will take their next cue from Friday’s inflation data. A softer PCE read would reinforce current expectations for easing and likely cap the DXY below its 50-day SMA. Conversely, stronger inflation could trigger a repricing in rates and push the index back toward the 98.834 to 99.177 resistance zone.

More Information in our Economic Calendar.