Dollar index holds near 102 as Fed speakers split over a December hike

The US dollar is trading near the top of its recent range, with the dollar index around 101.88, after touching a 52-week high of 102.95 last week [1]. Traders are weighing a Federal Reserve that raised rates in September for the first time in three years against fresh signs that inflation is not cooling as hoped [2][3]. September CPI rose 0.6% on the month and 3.7% annually, while producer prices climbed 1.3% on the month and 6.3% year on year, and retail sales increased 0.8% [4]. Futures markets put the probability of an October hike in the mid-teens, with a pause seen as the base case for the 27-28 October meeting, while the chance of a December hike sits close to 90% [4][3].

The picture is mixed. Cleveland Fed President Beth Hammack said a restrictive stance is appropriate and favoured quick, incremental adjustments to avoid an "inflationary mindset" taking hold [3]. New York Fed President John Williams struck a different tone, saying he expects one more hike this year but does not see a need for further increases in 2027, noting "disinflationary forces" still at play [5]. UBS Wealth Management told clients it expects "one further rate increase in December" but said resilient growth and earnings should let equities absorb moderate tightening [2]. UBS also pointed to core PCE inflation easing to 2.05% on a three-month annualised basis in August and September payrolls rising just 29,000, below expectations, even as the headline PCE gauge stood at 3.4% year on year in August with a 3% core reading [2][3][5].

The dollar index closed at 101.88, up 2.4% versus its 200-day moving average of 99.51 and 1.4% above its rising 50-day average of 100.44, with the daily trend reading as up [1]. The index is down 0.3% over the past week but up 1.3% over the past four weeks, and it trades above every swing high of the last six months, leaving no resistance level identified above the current price [1]. Nearest support sits at 100.56, with the next level at 100.35 [1]. The 14-day RSI reads 56, and the average daily range is 0.54, with the last five closes ranging between 101.84 and 102.55 [1]. The 10-year Treasury yield closed at 5.14%, up 63 basis points versus its 200-day average, after easing 10 basis points over the past week [1].

A daily close below the 100.56 support on the dollar index, or a drop toward the next level at 100.35, would mark a shift away from the current up trend described by the chart [1]. On the policy side, a clear convergence among Fed officials toward Williams' view that no further hikes are needed beyond one more this year, rather than Hammack's preference for continued tightening, would alter the rate-path narrative [3][5]. Confirmation that core PCE or payrolls continue the softening trend UBS highlighted, rather than reverting toward the hotter CPI and PPI prints cited this week, would also change the inflation picture feeding into Fed pricing [4][2][3].

Federal Reserve policy meeting, 27-28 October, with a pause seen as the base case and December hike odds near 90% [4][3].
Federal Reserve Board and FOMC economic projections and statement materials from the most recent meeting remain in focus for guidance on the rate path [6][7].
The full schedule for the week will be on the Praevis calendar page.

1. Daily prices: Yahoo Finance; trend, levels and RSI computed by Praevis
2. Yahoo Finance: UBS explains how looming Fed rate hike could impact your investments
3. CNBC (finance): Higher rates could be needed to avoid 'inflationary mindset' taking hold, says Fed's Hammack
4. Kitco News: Gold falls as dollar, Treasury yields rise; silver holds modest gains - Kitco PM Report
5. CNBC (finance): Williams says Fed may not have to hike rates in 2027, at odds with traders
6. Federal Reserve (press): Federal Reserve Board and Federal Open Market Committee release economic projections from the September 15-16 FOMC meeting
7. Federal Reserve (press): Federal Reserve issues FOMC statement