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United States Dollar Index holds gains near 101.50 on revival of hawkish Fed bets

  • The US Dollar Index holds gains near 101.50 on the resurgence of Fed’s interest rate hike prospects.
  • Surging oil prices have revived hawkish Fed bets.
  • US President Trump warns of major military punishment to Iran and Houthis.

The US Dollar (USD) clings to the previous day’s gains in the Asian session on Friday, as surging oil prices due to intensified Middle East energy supply risks have revived Federal Reserve (Fed) interest rate hike expectations.

At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades firmly near an over three-week high at 101.50.

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHF
USD0.43%1.05%0.92%0.45%-0.13%0.98%1.08%
EUR-0.43%0.63%0.43%0.02%-0.53%0.57%0.64%
GBP-1.05%-0.63%-0.22%-0.62%-1.17%-0.06%0.05%
JPY-0.92%-0.43%0.22%-0.38%-0.99%0.00%0.25%
CAD-0.45%-0.02%0.62%0.38%-0.54%0.39%0.66%
AUD0.13%0.53%1.17%0.99%0.54%1.10%1.23%
NZD-0.98%-0.57%0.06%-0.01%-0.39%-1.10%0.13%
CHF-1.08%-0.64%-0.05%-0.25%-0.66%-1.23%-0.13%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

In the Asian trade, the WTI Oil price trades 0.5% lower to near $90.60, but is close to its over six-week high of $92.25 posted on Thursday. Higher oil prices boost inflation expectations, a scenario that discourages Fed officials from considering loose monetary conditions.

The closure of the Bab el-Mandeb Strait, along with the Strait of Hormuz, has disrupted 27% of global energy supply.

Meanwhile, no signs of a diplomatic breakthrough between the US and Iran indicate that supply shocks could last long. On Thursday, US President Donald Trump said that Washington would hold Iran responsible for the Yemen-based Houthis’ actions and warned that Iran and its Houthi allies would both soon receive a “major military punishment”.

According to the CME FedWatch tool, the odds of the Fed delivering an interest rate hike in the policy meeting next week stand at 35.8%, significantly higher from 11.8% recorded last week. Fed’s interest rate hike prospects were similar to the current state a month ago, but they eased later after the release of the soft US Consumer Price Index (CPI) data for June.

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Chart of The Day – No changes in the Far East, USD/JPY Hits New Highs

USD/JPY is breaking out to new 40-year highs above 163.30 , and the market is signalling that the acceleration in the pace of the BOJ’s rate rises is already largely priced in.

Traffic conditions on the D1

The price has broken through the previous resistance level of 163.00 (purple line) and is reaching new highs in the 163.30–163.40 range, whilst the RSI (14) remains in a strong uptrend at around 69.4, close to the overbought zone. The candlesticks are holding above the EMA50 (161.32), EMA100 (160.13) and EMA200 (158.12), and the EMA configuration (rising, in the order 50 > 100 > 200) confirms a strong bullish trend. The price is close to the upper Bollinger Band (163.92), which signals strong momentum but also the risk of a short-term correction before the next attempt to break through the resistance at 164.00.

Why do the markets already price in faster BOJ rate rises?

The OIS (overnight index swap) market for 22 July 2026 implies a rate of 0.981 per cent, compared with an effective rate of 0.977 per cent, whilst contracts up to the 18 December meeting are already pricing in a rise to 1.277 per cent – effectively discounting approximately 1.2 rate rises in full. This means that reports of the BOJ’s readiness to accelerate the pace of rate rises come as no surprise to the market – investors began pricing in a more aggressive cycle well ahead of the consensus among economists.

This is also confirmed by the table of 1-month price changes: the cumulative change (“Total Change 1M”) for Japan is zero, which indicates that the market is no longer revising its forecasts upwards, but is instead stabilising following the earlier movement – the “faster pace” is, to a large extent, already behind us in terms of prices. Source: Bloomberg Financial LP

Carry trade remains dominant despite rate rises

The interest rate differential between Japan (1.00%, following a rise to a 31-year high) and the effective US rate (3.63%) remains huge, and the two-year US-Japan yield spread has widened to 285 basis points – its widest level since August last year. Even a potential further 25 bp rate rise would do little to reduce the appeal of this spread, which is fuelling carry trades based on the low cost of yen-denominated financing relative to high-yielding currencies such as the BRL, MXN and AUD.

The fundamental ‘loop’ driving the yen’s weakness

Apart from monetary policy, the yen is suffering from a ‘doom loop’ – Prime Minister Sanae Takaichi’s loose fiscal policy (debt-to-GDP ratio over 200 per cent) combined with the BOJ’s insufficiently tight monetary policy, which is pushing the yield on 10-year JGBs up to 2.90 per cent, the highest level in 30 years. Finance Minister Satsuki Katayama has once again signalled her readiness to take “decisive action” in the foreign exchange market, however, interventions to date (totalling around US$215 billion since 2022) have failed to reverse the trend of yen weakness on a sustained basis, which undermines the credibility of such announcements in the eyes of investors.

The options market confirms that there are no fears of a shock

The falling 1-month ATM implied volatility for USD/JPY since 2022, despite the deepening weakness in the spot market, suggests that options are not pricing in any significant risk of a sudden reversal – such as a sharp intervention or an unexpected rate hike – but rather a continuation of the current narrative regarding the currency. Source: Bloomberg Financial Lp

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United States Dollar Index struggles to lure buyers despite Iran tensions, Fed hike bets

  • DXY bulls refrain from placing aggressive bets and opt to wait for further geopolitical developments.
  • Rising oil prices fuel inflation fears and lift Fed rate hike bets, acting as a tailwind for the Greenback.
  • The supportive fundamental backdrop suggests that corrective pullbacks are likely to be bought into.

The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, struggles to capitalize on a modest Asian session uptick on Monday and currently trades around the 100.80-100.75 region, nearly unchanged for the day. Meanwhile, the near-term bias seems tilted firmly in favor of bullish traders amid escalating US-Iran tensions and hawkish US Federal Reserve (Fed) expectations.

In the latest developments surrounding the Middle East crisis, the US launched a ninth straight night of strikes against Iran on Sunday after announcing the death of another American service member in Iraq. US President Donald Trump said that the latest strikes were being carried out in honor of US service members killed in recent days. In response, Iran fired ballistic missiles and one-way attack drones targeting sites in Bahrain, Jordan, Kuwait, and Iraq. This raises the risk of a broader regional war and prompts traders to continue pricing in the geopolitical risk premium, which, in turn, should benefit the US Dollar’s (USD) safe-haven status.

Meanwhile, crude oil prices have jumped to a fresh high since June 12 as the closure of the critical Strait of Hormuz, alongside the US naval blockade of Iranian ports, fuels concerns about more supply disruptions in the Middle East. This sudden spike in energy prices stokes fears of a reacceleration in global inflation, which might force major central banks, including the US Federal Reserve (Fed), to adopt a more hawkish stance. According to the CME Group’s FedWatch Tool, traders are still pricing in the possibility of at least one interest rate hike by the Fed in 2026. This further validates the positive outlook for the USD and warrants some caution for bears.

Moving ahead, there isn’t any relevant market-moving economic data due for release from the US on Monday, leaving the buck at the mercy of comments from influential FOMC members. Apart from this, incoming geopolitical headlines might continue to infuse volatility in global financial markets and drive the USD demand. Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for the index remains to the upside, and any meaningful corrective pullback is more likely to be bought into.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHF
USD0.02%-0.05%-0.03%-0.09%-0.09%-0.13%0.07%
EUR-0.02%-0.04%-0.06%-0.13%-0.11%-0.18%0.05%
GBP0.05%0.04%-0.02%-0.07%-0.04%-0.12%0.07%
JPY0.03%0.06%0.02%-0.05%-0.05%-0.06%0.10%
CAD0.09%0.13%0.07%0.05%0.00%-0.01%0.14%
AUD0.09%0.11%0.04%0.05%-0.01%-0.03%0.17%
NZD0.13%0.18%0.12%0.06%0.01%0.03%0.17%
CHF-0.07%-0.05%-0.07%-0.10%-0.14%-0.17%-0.17%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

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GBP weakens below 1.3500 as US launches new wave of strikes against Iran

  • GBP/USD softens to near 1.3470 in Friday’s Asian session.
  • The US launched a new wave of strikes against Iran for a sixth day in a row.
  • Traders still ramp up their bets on BoE rate hikes this year.

The GBP/USD pair trades on a softer note around 1.3470 during the Asian trading hours on Friday. Geopolitical tensions in the Middle East trigger risk-off market sentiment and weigh on the Cable. The preliminary reading of the Michigan Consumer Sentiment Index for July is due later on Friday.

The United States (US) has carried out major strikes on Iran for the sixth day in a row. Officials in southern Iran’s Bandar Abbas reported that civilian infrastructure, including power facilities and a train station, has been hit.

The US Central Command (CENTCOM) said that the attacks were intended to “further degrade Iranian military capabilities” before saying it had boarded a vessel as part of its blockade of the strait. Earlier this week, US President Donald Trump threatened to strike Iran’s bridges and power plants if the country did not return to talks. Rising tensions in the Middle East could boost a safe-haven currency such as the US Dollar (USD) against the British Pound (GBP). 

Data released on Tuesday showed that US Consumer Price Index (CPI) inflation slowed in June, while data from Wednesday showed a decline in the Producer Price ‌Index (PPI). Traders are now pricing ‌in nearly a 55% chance that the Federal Reserve (Fed) will hike rates in September, according to the CME FedWatch Tool.

On the UK front, Bank of England (BoE) Governor Andrew Bailey said on Tuesday that he was concerned about the resumption of hostilities between the US ‌and Iran in recent days, but so far, there has been no big impact on the UK inflation outlook. Money markets are fully pricing in a BoE hike by the November policy meeting, with a second rate hike priced in by April 2027, according to Reuters.

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AUD moves away from three-week top as geopolitics and Fed hike bets lift USD

  • AUD/USD attracts some sellers for the second straight day amid a modest USD uptick.
  • Escalating US-Iran tensions, reviving inflation fears, and Fed hike bets underpin the buck.
  • The RBA’s relatively hawkish stance and steady data from China could support the AUD.

The AUD/USD pair remains on the back foot for the second straight day and slides to the 0.7980 region during the Asian session on Friday. Nevertheless, spot prices seem poised to register gains for the third week in a row and remain within striking distance of a nearly three-week high, touched on Wednesday.

The US Dollar (USD) looks to build on the previous day’s goodish recovery from a nearly one-month low amid a combination of supporting factors and exerts some downward pressure on the AUD/USD pair. Further escalation of tensions between the US and Iran keeps geopolitical risk in play. Furthermore, concerns about energy-driven inflation revive bets for a US Federal Reserve (Fed) rate hike in 2026 and underpin the safe-haven Greenback.

In the latest developments surrounding the Middle East crisis, the US stepped up its attacks on Thursday and carried out a sixth consecutive night of air strikes against Iran. The US also struck an empty oil tanker headed for Kharg Island as part of its renewed naval blockade of Iranian ports. Tehran responded by attacking US military facilities across the region, raising fears of a return to all-out war and triggering the global flight to safety.

Iran’s Islamic Revolutionary Guard Corps had threatened to expand the conflict by targeting additional regional energy supply routes. Furthermore, Reuters reported that Iran has asked Yemen’s Houthis to stand ready to close the Red Sea oil route, posing a potent new threat to global energy supplies. This remains supportive of elevated crude oil prices, fueling inflation fears and bolstering bets for at least one Fed rate hike by the year-end.

Market expectations were reaffirmed by Thursday’s upbeat US Initial Jobless Claims data and the Philly Fed Manufacturing Index. Adding to this, Dallas Fed President Lorie Logan called on Thursday for modestly higher interest rates to win a battle the central bank has been losing for the past five years. Separately, Fed Vice Chair Philip Jefferson said that he would be open to raising rates if inflation does not show near-term improvement.

The aforementioned fundamental backdrop favors the USD bulls and backs the case for a further depreciating move for the AUD/USD pair. However, the Reserve Bank of Australia’s (RBA) relatively hawkish stance, along with steady economic data from China, could lend support to the China-proxy Australian Dollar (AUD), warranting caution before placing aggressive bearish bets on the currency pair and positioning for deeper losses.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.00%0.07%0.03%-0.04%0.17%0.09%0.00%
EUR-0.01%0.07%0.00%-0.07%0.17%0.09%-0.01%
GBP-0.07%-0.07%-0.09%-0.14%0.09%0.03%-0.08%
JPY-0.03%0.00%0.09%-0.06%0.16%0.06%-0.01%
CAD0.04%0.07%0.14%0.06%0.22%0.14%0.04%
AUD-0.17%-0.17%-0.09%-0.16%-0.22%-0.09%-0.18%
NZD-0.09%-0.09%-0.03%-0.06%-0.14%0.09%-0.09%
CHF-0.00%0.01%0.08%0.01%-0.04%0.18%0.09%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

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Japanese Yen softens on renewed US-Iran tensions, Japan flags intervention risk

  • USD/JPY trades with mild gains around 162.40 in Friday’s Asian session. 
  • The US is carrying out major strikes on Iran for the sixth consecutive day, lifting the US Dollar. 
  • Japan’s Katayama said authorities are ready to act on currency moves whenever necessary. 

The USD/JPY pair posts modest gains near 162.40 during the Asian trading hours on Friday. The US Dollar (USD) strengthens against the Japanese Yen (JPY) as the United States (US) launches a new wave of strikes against Iran for a sixth night in a row. Traders will keep an eye on the preliminary reading of the Michigan Consumer Sentiment Index for July later on Friday. 

The US Central Command (CENTCOM) said on Thursday that it launched a new wave of strikes against Iran for a sixth night in a row, per the BBC. The US military said that the attacks were intended to “further degrade Iranian military capabilities” before saying it had boarded a vessel as part of its blockade of the Strait of Hormuz.

Iran’s state media reported US missiles struck close to the island of Qeshm, near the strait, as well as in Bandar Abbas and Bushehr, the site of a nuclear power plant. Earlier this week, US President Donald Trump threatened to strike Iran’s bridges and power plants if the country did not return to talks. Renewed Hormuz hostilities could boost the Greenback against the JPY in the near term. 

Kyodo News Agency reported on Friday that the Japanese government will state in its economic blueprint that decisions on specific monetary policy tools should be left to the Bank of Japan (BoJ). A final version of the blueprint will also state that the government will reach a decision “by early August” on whether and by how much Japan will cut 8% consumption tax levied on food.

Traders remain on alert for possible intervention from Japanese officials. Japan’s Finance Minister Satsuki Katayama said on Friday that the authorities are ready to act on currency moves whenever necessary. 

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Chinese Yuan loses as safe-haven demand lifts US Dollar

  • USD/CNH climbs as rising Middle East tensions drive investors toward the US Dollar as a safe-haven asset.
  • Iran told Houthi rebels to block the Red Sea oil route if the US attacks Iranian infrastructure.
  • Economists and an adviser say China can stabilize growth by fast-tracking already-budgeted national infrastructure projects this year.

USD/CNH gains ground for the second successive day, trading around 6.7760 during the Asian hours on Friday. The pair appreciates as the US Dollar (USD) receives support from escalating developments surrounding conflicts in the Middle East.

Reuters reported on Thursday that Iran has instructed Yemen’s Houthi militia to stand ready to close the critical Red Sea oil route if the United States strikes Iranian power infrastructure, presenting a potent new threat to global energy supplies. Amplifying these concerns, the Tasnim news agency reported explosions in Bandar Abbas, Qeshm, and Ahvaz, while very loud explosions were also heard in Kuwait and as far away as Basra.

These geopolitical flare-ups follow threats made earlier this week by US President Donald Trump, who stated the US would strike Iran’s bridges and power plants next week if the country does not return to the negotiating table. Ultimately, these signs of escalating tensions in the Middle East could boost safe-haven currencies like the US Dollar, potentially creating a strong tailwind for the USD/CNH pair in the near term.

China can stabilize its economic growth this year by fast-tracking already-budgeted national infrastructure projects, according to economists and a government adviser. This approach reduces the likelihood of large-scale fiscal stimulus. The strategy allows Beijing to counter an unexpected, broad decline in investment—which recent data showed has dragged down growth—while maintaining strict control over local government spending, per Reuters.

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Chart of the Day – What is next for July’s strongest currency?

The geopolitically turbulent start of July has brought a strengthening of commodity currencies (among them, the Norwegian krone). However, the top of the G10 list is occupied by the New Zealand dollar, which may come as a surprise to some. The currency has strengthened by nearly 2.5% against the dollar over the past two weeks.

What lies behind such a significant move?

Fundamental to this, as is often the case, were the actions of the central bank. On 8 July, the Reserve Bank of New Zealand raised the main interest rate by 25 bps, lifting it to 2.5%. This was the first rate hike in New Zealand in over three years. The key, however, was not just the decision to raise rates (which was largely priced in by markets) but the communication that accompanied it.

  • The decision was made unanimously by the committee. At the previous meeting in May, there was a 3-3 split in votes, and the balance was only tipped by the new governor, Anna Breman.
  • The RBNZ Chief Economist, Paul Conway, drew clear attention to pro-inflationary risks resulting from the escalation of tensions in the Middle East.
  • The Bank stated in its communiqué that “while further interest rate hikes seem likely at upcoming meetings, their timing is highly uncertain.”
  • RBNZ research suggests that after a long period of elevated inflation, New Zealand companies are significantly more inclined to immediately pass costs on to consumers and less willing to lower prices when costs fall.

As a result, the market’s baseline scenario is another hike in September and another upward move in October or December. This would bring the main interest rate (cash rate) to 3%, which the bank currently defines as the neutral level.

What lies ahead? There is still plenty of time until September.

  • In the meantime, the Q2 inflation report will be published. The consensus assumes a significant increase in the headline indicator, most likely to around 4%.
  • After the manufacturing PMI rose to its highest level since 2021 (59.7), data on production could prove particularly interesting.

Data from China, New Zealand’s largest trading partner, which absorbs nearly 25% of the country’s total exports (mainly dairy, meat, wood, and fruit), will also be significant.

  • Stronger economic data from the Middle Kingdom usually means greater demand for products imported from New Zealand.
  • In this context, the readings published today are not particularly optimistic. GDP dynamics fell to the lowest level since 2022 (+4.3% year-on-year).
  • The Asian giant is burdened by a property market crisis, weak domestic demand, and a decline in investment (down 5.7% year-on-year in the first half of the year).

The strength of the dollar itself, which is awaiting further news from the geopolitical front and the September FOMC decision, could, of course, also prove key.

  • The market does not really expect a hike, so the focus will be on communication. Kevin Warsh remains enigmatic, so upcoming conferences may attract particular attention.

Technical Analysis Figure 1: NZDUSD [D1] (08.07.2025 – 15.07.2026)

Source: xStation, 15.07.2026 The NZDUSD pair has broken out of the downtrend and is currently testing key support levels. The price has breached the 50% Fibonacci retracement and is hovering around the 150-day moving average. The upward momentum is also suggested by the MACD indicator. The Relative Strength Index (RSI) has reached 63.4, which confirms a clear advantage for market bulls, while at the same time indicating that the market is not yet in the extreme overbought zone (above 70).