The US dollar index retreated from its highs as markets focused on expectations of a Federal Reserve interest rate hike and US employment data.
2026-07-09 13:58:50
The US dollar index continued its weakness in Asian trading on Thursday, fluctuating around the 101.00 level, with a daily decline of about 0.1%. The dollar index, which measures the dollar's performance against a basket of major currencies, traded within the range of the previous trading day, with neither bulls nor bears having formed a clear direction. The recent upward momentum of the dollar has weakened, mainly because the latest minutes of the Federal Reserve meeting did not show a significant hawkish shift. The minutes of the Fed's monetary policy meeting held on June 16-17 revealed significant disagreement within the policymaking body regarding the future path of interest rates.
The meeting minutes indicated that some Federal Reserve officials believed the federal funds rate might remain at its current level or slightly below the current target range by the end of the year , suggesting that some policymakers were beginning to focus on the risks of slowing economic growth. However, the meeting also emphasized that upside risks to inflation remained high , and some officials believed that a certain degree of tightening policy might still be necessary to push inflation back to the 2% target.
The market remains cautious about the Federal Reserve's future policies. Market pricing indicates that investors expect a 70% probability of a 25 basis point rate hike at the Fed's September meeting, an expectation that continues to provide support for the dollar. Meanwhile, renewed tensions in the Middle East are a significant factor influencing the dollar's trajectory. The US recently launched a new round of military operations against Iranian targets in response to Iran's earlier actions against commercial vessels in the Strait of Hormuz, after which Iran retaliated against US military facilities in Bahrain and Kuwait.
As tensions between the US and Iran escalate again, international oil prices have risen rapidly, reigniting market concerns that energy prices could drive up global inflation. This shift reinforces expectations that the Federal Reserve will maintain a high-interest-rate environment and also increases market demand for the US dollar as a safe haven. However, the upside potential for the dollar remains somewhat limited. On the one hand, there are disagreements within the Federal Reserve regarding future policy direction, and the market has not yet fully confirmed a continued path of interest rate hikes; on the other hand, US economic data will be a crucial factor in determining the dollar's future trend.
Investors are currently awaiting the latest U.S. initial jobless claims data. If the job market continues to cool, it could weaken the dollar's upward momentum and prompt the market to reassess expectations for Federal Reserve policy; conversely, if the employment data remains resilient, it could further strengthen the dollar's high-level trading pattern.
From a daily chart perspective, the US dollar index remains in a medium-term rebound structure, with prices holding above major moving averages. The MACD maintains a golden cross, but the momentum bars have shortened , indicating a marginal slowdown in upward momentum. Key resistance levels to watch are 101.50 and 102.20 ; a break above these levels could open up further upside potential. On the downside, support levels to watch are 100.20 and 99.50 ; a break below these levels could increase short-term downward pressure.
From a four-hour chart perspective, the US dollar index has entered a consolidation phase at high levels, with short-term prices fluctuating around the moving average. The MACD shows signs of a death cross, indicating weakening short-term momentum , but the dollar remains supported by safe-haven demand and interest rate expectations. If it regains a foothold above 101.00 , it may test the 101.50 resistance level; if it falls below 100.20 , it may further retrace to around 99.50 .
Editor's Summary : The US dollar index is currently in a phase influenced by a confluence of factors. On the one hand, disagreements within the Federal Reserve regarding the interest rate path are hindering a sustained rise in the dollar. On the other hand, escalating tensions in the Middle East are driving up energy prices and safe-haven demand, while reinforcing market expectations of a continued high-interest-rate environment, thus supporting the dollar. In the short term, the dollar's trajectory will largely depend on US employment data, changes in inflation expectations, and whether geopolitical risks escalate further. If economic data remains stable, the dollar may continue to fluctuate at high levels; however, if the job market cools significantly, the dollar may face further downward pressure.
The meeting minutes indicated that some Federal Reserve officials believed the federal funds rate might remain at its current level or slightly below the current target range by the end of the year , suggesting that some policymakers were beginning to focus on the risks of slowing economic growth. However, the meeting also emphasized that upside risks to inflation remained high , and some officials believed that a certain degree of tightening policy might still be necessary to push inflation back to the 2% target.
The market remains cautious about the Federal Reserve's future policies. Market pricing indicates that investors expect a 70% probability of a 25 basis point rate hike at the Fed's September meeting, an expectation that continues to provide support for the dollar. Meanwhile, renewed tensions in the Middle East are a significant factor influencing the dollar's trajectory. The US recently launched a new round of military operations against Iranian targets in response to Iran's earlier actions against commercial vessels in the Strait of Hormuz, after which Iran retaliated against US military facilities in Bahrain and Kuwait.
As tensions between the US and Iran escalate again, international oil prices have risen rapidly, reigniting market concerns that energy prices could drive up global inflation. This shift reinforces expectations that the Federal Reserve will maintain a high-interest-rate environment and also increases market demand for the US dollar as a safe haven. However, the upside potential for the dollar remains somewhat limited. On the one hand, there are disagreements within the Federal Reserve regarding future policy direction, and the market has not yet fully confirmed a continued path of interest rate hikes; on the other hand, US economic data will be a crucial factor in determining the dollar's future trend.
Investors are currently awaiting the latest U.S. initial jobless claims data. If the job market continues to cool, it could weaken the dollar's upward momentum and prompt the market to reassess expectations for Federal Reserve policy; conversely, if the employment data remains resilient, it could further strengthen the dollar's high-level trading pattern.
From a daily chart perspective, the US dollar index remains in a medium-term rebound structure, with prices holding above major moving averages. The MACD maintains a golden cross, but the momentum bars have shortened , indicating a marginal slowdown in upward momentum. Key resistance levels to watch are 101.50 and 102.20 ; a break above these levels could open up further upside potential. On the downside, support levels to watch are 100.20 and 99.50 ; a break below these levels could increase short-term downward pressure.
From a four-hour chart perspective, the US dollar index has entered a consolidation phase at high levels, with short-term prices fluctuating around the moving average. The MACD shows signs of a death cross, indicating weakening short-term momentum , but the dollar remains supported by safe-haven demand and interest rate expectations. If it regains a foothold above 101.00 , it may test the 101.50 resistance level; if it falls below 100.20 , it may further retrace to around 99.50 .
Editor's Summary : The US dollar index is currently in a phase influenced by a confluence of factors. On the one hand, disagreements within the Federal Reserve regarding the interest rate path are hindering a sustained rise in the dollar. On the other hand, escalating tensions in the Middle East are driving up energy prices and safe-haven demand, while reinforcing market expectations of a continued high-interest-rate environment, thus supporting the dollar. In the short term, the dollar's trajectory will largely depend on US employment data, changes in inflation expectations, and whether geopolitical risks escalate further. If economic data remains stable, the dollar may continue to fluctuate at high levels; however, if the job market cools significantly, the dollar may face further downward pressure.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
