Traders now assign a 56.3% chance of a Fed rate hike this year, lifting the USD Index to 99.40 amid geopolitical tensions.
The US Dollar Index (DXY) traded near 99.40, its highest level in six weeks, as markets priced out expectations for a Federal Reserve rate cut in 2024. The shift follows rising oil prices and escalating Middle East tensions, which have bolstered hawkish Fed bets.
Earlier this year, traders anticipated two rate cuts, but the CME FedWatch tool now shows a 56.3% probability of at least one hike. The dollar strengthened most against the Swiss Franc, reflecting broad-based demand amid geopolitical risks.
Heightened US-Iran tensions, including threats of military action, have further supported the dollar’s rally. Iran’s Revolutionary Guard warned of expanded conflict if attacks resume, adding to market uncertainty.