U.S Dollar Index rises toward 100 as rate-cut bets fade and trade hopes resurface
U.S. Dollar Index rises toward 100
The U.S. Dollar Index (DXY) is staging a firm recovery this week, rebounding strongly from recent lows as policy signals from the Federal Reserve and a surprise announcement from President Trump shift market sentiment.
After dipping below the 100 psychological mark earlier in the week, the dollar has now climbed back to a four-day high near 99.80, eyeing a retest of the round number barrier.
The rebound began late Wednesday in the North American session after Fed Chair Jerome Powell pushed back against speculation of near-term rate cuts. His comments which were delivered during the FOMC press conference contradicted market expectations by maintaining a "wait and see" posture. The immediate market response was a 0.4% jump in the dollar index, breaking a streak of three straight bearish downclose days.
DXY price dynamics (April - May 2025). Source: TradingView
Further optimism was injected by President Trump’s comments posted to his Truth Social account, hinting at a “major” trade agreement with a “highly respected country.” The timing of this announcement set for 10:00 AM ET, May 8, has stirred speculation about renewed trade flows and improved external demand for the greenback.
The U.S. Dollar Index supported by RSI upturn and bullish break above 99.55 resistance
Technically, the dollar index has cleared the downward-sloping trendline from last week’s high at 100, breaking above prior resistance at 99.55. The move is backed by healthy RSI readings on both the 4-hour timeframe, which is trending higher but not yet near overbought territory. This leaves scope for an extended push higher toward the 100 level.
However, immediate resistance lies at the 20-day EMA, which currently aligns near 99.80. A further clear breakout above the 100 level would mark a third consecutive swing higher high since the dollar touched its multi-year low at 97.5 in April, strengthening the case for a medium-term bullish reversal. All eyes are now on whether momentum and supportive fundamentals can help lift the dollar index back above 100 and sustain it there.
The U.S. Dollar Index rebounded on Wednesday but stalled ahead of the FOMC announcement. Traders priced in caution as U.S.-China trade talks and policy risks capped bullish momentum.
