US data such as ADP jobs, ISM services prices and the Federal Reserve’s Beige Book may support expectations of limited Fed easing in 2026. ING said the dollar may stay supported by current interest-rate pricing, but it may not hold above 100.35 on the DXY index without better energy-market conditions. ING referred to a re-pricing at the short end of the yield curve linked to inflation risk from an energy shock. It said this move briefly reversed after equity losses, but could remain the main market theme unless another major equity sell-off occurs.

Market Focus For Upcoming Data

The note said markets will watch the ADP report, with an assumed outcome near +50k. It also pointed to the ISM services “prices paid” component, where a high reading could support the dollar. The Beige Book is due ahead of the 18 March FOMC meeting and may be assessed for signs that price pressures remain sticky. ING said this could lead markets to further reduce expectations for two Fed cuts, with 45bps of easing currently priced for this year. DXY reached 99.68 yesterday. ING said the index may struggle to move and stay above the 100.00 to 100.35 area. The market is re-evaluating the Federal Reserve’s path for 2026, scaling back expectations for rate cuts. Recent data, like the stronger-than-expected February ADP report showing 85,000 new jobs, suggests the labor market remains resilient. This reinforces our view that the Fed has limited room to ease policy in the near term.

Implications For The Dollar Outlook

Persistent price pressures are a key driver, which supports a stronger dollar. The ISM services prices paid index just came in at 61.5, confirming that inflation in the services sector remains stubbornly high. For derivative traders, this suggests that buying call options on the US dollar, or selling out-of-the-money puts, could be a viable strategy to position for continued strength. Last night’s Fed Beige Book further solidifies this hawkish outlook ahead of the March 18th FOMC meeting. The report highlighted that businesses continue to face and pass on higher costs, particularly from energy. This narrative makes it less likely the Fed will signal significant easing anytime soon, reducing the number of rate cuts priced into futures markets. The Dollar Index (DXY) is testing the upper end of its recent range, approaching the 100.35 resistance level. We saw similar price action in the latter half of 2025 when the market first digested the reality of fewer rate cuts. A sustained break above this will likely require a further shock, possibly from energy markets. The energy situation remains a critical factor, preventing traders from confidently taking on short dollar positions. With Brent crude futures holding firm above $95 per barrel due to ongoing supply concerns, a key inflationary pressure persists. This makes long volatility strategies on USD pairs attractive, as any escalation could trigger a sharp move through resistance. Create your live VT Markets account and start trading now.

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