US Dollar Index Holds Near 100 After CPI Cuts Fed Hike Bets

US Dollar Index holds near 100 as softer CPI reduces Fed hike bets. Track DXY levels, PPI data, Fed signals and Middle East risks shaping dollar moves.

Dollar Struggles Above 100

The U.S. Dollar Index (DXY) remained under pressure near the 100.00 psychological threshold on Thursday, extending its inability to establish a sustained breakout. The index edged lower during the Asian session while remaining trapped within a nearly two-week trading range, signaling that investors are waiting for a stronger catalyst before committing to the next major move.

The dollar’s latest weakness follows a softer U.S. inflation picture and growing doubts about near-term Federal Reserve tightening. July’s Consumer Price Index (CPI) showed inflation continuing to moderate, reinforcing expectations that policymakers may have less urgency to raise interest rates. The report followed last Friday’s weaker-than-expected Nonfarm Payrolls (NFP) data, adding further pressure to U.S. rate-hike expectations.

Lower expectations for higher borrowing costs generally reduce the appeal of the dollar because investors anticipate less support from U.S. interest-rate differentials.

PPI and Geopolitics Take Focus

Attention now turns to the U.S. Producer Price Index (PPI), scheduled for release during the North American session. The data could provide fresh clues about underlying inflation pressures and influence expectations for the Federal Reserve’s next policy decision.

Meanwhile, geopolitical developments remain an important counterweight to the dollar’s recent weakness. Oil prices remain vulnerable to sharp swings as tensions surrounding the United States and Iran continue to threaten the outlook for energy markets. President Donald Trump said the U.S. had total control of the Strait of Hormuz, while Iran maintained its own claims over the strategically important waterway.

Higher energy prices could reignite inflation concerns, potentially limiting expectations for easier Federal Reserve policy. That dynamic may offer the dollar temporary support even as economic data weighs on the currency.

Key catalysts for the DXY include:

• U.S. PPI inflation data and upcoming Fed commentary
• Developments involving the Strait of Hormuz and Middle East tensions

DXY Technical Levels in Focus

From a technical perspective, the four-hour DXY chart shows the index holding above its 50-period Simple Moving Average (SMA) at 99.82. This keeps a modest bullish bias intact in the near term, despite the broader consolidation around 100.00.

A sustained move above 100.00 would strengthen the bullish setup and potentially open the door to further gains. Conversely, repeated rejection near that level would signal that sellers remain active.

If the index retreats, the 99.82 50-period SMA becomes an important support area. Buyers could attempt to defend that level and preserve the short-term bullish structure. A decisive break below it, however, would weaken the current setup and shift attention toward lower support zones.

For now, the DXY remains caught between softer U.S. economic data and renewed inflation risks from energy and geopolitical uncertainty. The PPI report and Federal Reserve commentary could determine whether the dollar finally breaks its narrow range.