Markets price in under 20bps of Fed tightening by September as USD rally stalls near key support levels.
The US Dollar Index extended its decline for a third consecutive session as expectations for Federal Reserve rate hikes softened. Swaps now reflect less than 20bps of tightening by September, weakening the dollar’s recent upward momentum.
The DXY’s May-June rally has shown signs of stalling, with strategists noting a bearish pause in price action. Prior sessions saw the index test resistance levels, but fading hawkish sentiment has curbed further gains.
Analysts suggest corrective pressure could push the DXY toward the 100.50-100.60 range, a key support zone. The shift in Fed pricing follows growing market skepticism over additional near-term tightening.