US Dollar Rallies on Powell's Hawkish Stance, DXY Hits 3-Week High

The US Dollar Index has surged to 104.50, marking a three-week high after gaining 0.7% following Federal Reserve Chair Powell's unexpectedly hawkish commentary. Powell emphasized the Fed's commitment to fighting inflation "until the job is done," reinforcing expectations for rates to remain higher for longer. Markets have repriced the probability of rate cuts in 2025, with futures now showing only 50 basis points of easing versus 75 basis points previously expected. The dollar's strength was broad-based, with EUR/USD falling to 1.0765 and GBP/USD dropping below 1.2700. Technical analysis shows the DXY breaking above key resistance at 104.20, opening the path toward 105.00. The bullish momentum is supported by strong US economic fundamentals and widening interest rate differentials. Traders are positioning for continued dollar strength ahead of next week's US inflation data.