HG MARKETS: 

The US Dollar Index (DXY) strengthened significantly, rising to around 99.46 as expectations for a more hawkish Federal Reserve increased. The Dollar also benefited from relatively neutral comments by President Donald Trump regarding the Fed’s upcoming interest-rate decision.

Markets are now pricing in a high probability of a Federal Reserve rate hike at Wednesday’s policy meeting. The stronger-than-expected August US CPI data has pushed investors to reassess their expectations for the Fed’s interest-rate path, supporting the Dollar.

the latest inflation data has increased expectations for higher US interest rates. Markets are currently pricing an 88% probability of a September rate hike, while expectations for the terminal rate in 2027 have also moved higher.

Rising oil prices are providing another source of support for the US Dollar. Brent crude extended its gains following the precautionary shutdown of a major Saudi pipeline and growing concerns over regional supply disruptions and shipping routes around the Strait of Hormuz.

Higher oil prices could add to global inflationary pressures, potentially encouraging central banks to maintain tighter monetary policies. This dynamic has historically provided additional support to the US Dollar, particularly during periods of heightened Middle East supply risks.

Technically, the DXY has regained the 20-day EMA at 99.28, turning the near-term outlook bullish. The RSI has also recovered to 51.19, indicating that bearish momentum has weakened and buyers are gradually regaining control.

The immediate support level stands at 99.28, followed by 99.00. A break below 99.00 could expose the index to the September low near 98.60. On the upside, sustained strength could push the DXY toward the 100.00 level, near the August 13 high.