The U.S. dollar index could face an essential week after hitting resistance ahead of the key 100 level.
USDX – Weekly Chart
The price of the USDX has found resistance at the 99.80 level, and the week ahead could be important. The dollar could start to correct again, and that could eye the 97.00 level first.
The dollar’s recent push toward the 100 level has seen a sell-off in assets like Bitcoin and stocks. If the dollar index takes a tougher path, it could mean that crypto, stocks, and gold can advance.
The probability of a Federal Reserve rate increase is now at 22%, down from 97% as of mid-October, according to economists. The CME Fedwatch tool forecasts rate cuts based on changes in 30-Day Fed Funds futures prices and shows slightly better odds of a reduction, at about 41%.
The current belief among Wall Street economists and traders is that the Fed will leave rates unchanged at its next two-day meeting on December 9-10. That would be a pause after two consecutive cuts in September and October.
The recent shift in expectations for future Fed rate cuts follows a six-week blackout in federal economic data due to the government shutdown. Last month, Fed Chair Jerome Powell said that a December rate cut wasn’t a “foregone conclusion,” pointing to signs that the job market is steady.
“Given that today’s numbers were not a bad as feared, in conjunction with hawkish statements from the Fed recently, it does appear that the Fed will skip a cut in December,” said Preston Caldwell, the chief U.S. economist at Morningstar.
“But with the negative trend in labor markets remaining in place, we’d expect the Fed to resume cutting in their next meeting in January 2026, if they don’t cut this December,” he added.
The recent strength in the dollar has coincided with a downturn in crypto prices. But gold has powered higher again, and weakness in the dollar could spur further strength in the precious metal.
