DXY Rallies as Hawkish Fed Repricing and Tech Selloff Boost USD

The US Dollar Index (DXY) advanced on Monday as markets repriced Federal Reserve rate expectations higher and a broad technology sector selloff amplified safe-haven demand for the greenback. EUR/USD and GBP/USD both declined as traders reassessed the likelihood of near-term Fed rate cuts following recent resilient US economic data, which has pushed back the timeline for monetary easing. The EUR/GBP cross also saw notable movement as relative policy divergence between the ECB and Bank of England created additional trading opportunities. The tech-driven equity correction—described as market indigestion from overvalued AI-related assets—further supported the dollar by triggering capital flows out of risk assets and into USD-denominated safe havens. The DXY is testing resistance near recent highs, with a sustained break potentially targeting multi-month peaks. Key support for EUR/USD and GBP/USD lies at their respective recent lows. Traders should focus on upcoming Fed speakers and economic releases this week for further directional cues, as any shift in rate expectations could accelerate or reverse current dollar strength.