USD Index Near 100 as Fed Caution & Rival Weakness Drive Dollar Gains

The US Dollar Index has strengthened to approach the 100 mark, gaining 0.8% this week as the Federal Reserve maintains its cautious policy stance amid persistent inflation concerns. The dollar's rally is supported by four key factors: the Fed's reluctance to cut rates aggressively, easing US-China trade tensions following diplomatic talks, reduced government shutdown risks after budget negotiations, and notable weakness in major rival currencies. The EUR/USD has dropped to 1.0820 (-0.5%) as European growth concerns mount, while USD/JPY climbed to 149.50 (+0.7%) despite BoJ intervention warnings. GBP/USD fell below 1.2900 (-0.4%) on UK economic headwinds. Technical indicators show the DXY testing resistance at 100.20, with momentum indicators suggesting further upside potential. Traders are positioning for continued dollar strength unless upcoming US economic data significantly disappoints expectations.