United States Dollar Index rises to near 99.50 as Fed rate hike bets increase

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is gaining ground for the third consecutive day and trading around 99.30 during Asian hours on Monday.

The Greenback gains support amid aggressive Federal Reserve (Fed) rate-hike bets for Wednesday’s decision following hotter US inflation reports. Financial markets have priced in nearly an 87% probability of a quarter-point rate hike at the Fed's September meeting, up from 59% a week ago, according to the CME FedWatch tool.

The US Consumer Price Index (CPI) accelerated in August, reinforcing expectations that the US central bank will raise interest rates next week. Data released by the Bureau of Labor Statistics on Friday showed that the US CPI rose 0.4% MoM in August, putting the 12-month increase at 3.4%. Both readings came in line with market expectations. Meanwhile, the core CPI, which excludes volatile food and energy prices, increased by 0.3% on a monthly basis, versus 0.2% prior, beating the forecast of 0.2%.

Technical Analysis:

In the daily chart, Dollar Index Spot trades at 99.30, retaining a bearish near-term bias as it holds below the longer-term 50-day Exponential Moving Average (EMA) while only marginally above the short-term nine-day EMA at 99.12. This configuration suggests the broader trend remains under pressure, with recent price action still capped by overhead supply. The 14-day Relative Strength Index (RSI) at 48.04 sits just under the neutral 50 line, hinting at subdued momentum rather than a strong directional impulse.

On the topside, initial resistance is located at the 50-day EMA at 99.63, and a sustained break above this level would be needed to ease the prevailing bearish tone. On the downside, immediate support emerges at the nine-day EMA at 99.12; a daily close beneath this short-term average would reinforce the downside bias and open the door to further weakness in the Dollar Index Spot.