{"id":47165,"date":"2026-05-14T09:17:14","date_gmt":"2026-05-14T09:17:14","guid":{"rendered":"https:\/\/www.vtmarketsglobal.com\/en\/uncategorized\/47165\/"},"modified":"2026-05-14T09:17:14","modified_gmt":"2026-05-14T09:17:14","slug":"dollar-firms-as-fed-hike-bets-return","status":"publish","type":"post","link":"https:\/\/www.vtmarketsglobal.com\/en\/analysis\/47165\/","title":{"rendered":"Dollar Firms as Fed Hike Bets Return"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/www.vtmarketsglobal.com\/en\/wp-content\/uploads\/sites\/6\/2026\/05\/1_USD2-1-1024x573.webp\" alt=\"\" class=\"wp-image-47057\"\/><\/figure>\n\n\n\n<p><strong>Key Points<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>USDX traded at <strong>98.423<\/strong>, up <strong>0.045<\/strong>, or <strong>0.05%<\/strong>, after reaching a session high of <strong>98.438<\/strong>.<\/li>\n\n\n\n<li>The USDX dollar index was last near <strong>98.48<\/strong>, up more than <strong>0.6%<\/strong> for the week and on track for its strongest weekly performance since the start of the Iran war.<\/li>\n\n\n\n<li>Markets now price a <strong>31.8%<\/strong> chance of a Fed rate hike in <strong>December<\/strong>, up from just over <strong>16%<\/strong> one week ago.<\/li>\n\n\n\n<li>The offshore yuan strengthened for an <strong>eighth straight day<\/strong> to <strong>6.7845<\/strong>, while the euro held near <strong>$1.1717<\/strong>.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-dots\"\/>\n\n\n\n<p>The US dollar held firm on Thursday as traders moved further away from the idea of near-term Federal Reserve easing. Higher US Treasury yields, hot inflation data, and renewed pricing for rate hikes gave the dollar a stronger base, even as global markets watched the two-day summit between US President Donald Trump and China\u2019s Xi Jinping.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Dollar buoyed by rate hike expectations as Trump-Xi summit underway <a href=\"https:\/\/t.co\/Bygkd3GQKL\">https:\/\/t.co\/Bygkd3GQKL<\/a> <a href=\"https:\/\/t.co\/Bygkd3GQKL\">https:\/\/t.co\/Bygkd3GQKL<\/a><\/p>&mdash; Reuters (@Reuters) <a href=\"https:\/\/twitter.com\/Reuters\/status\/2054821526789050622?ref_src=twsrc%5Etfw\">May 14, 2026<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>USDX traded at <strong>98.423<\/strong>, up <strong>0.045<\/strong>, or <strong>0.05%<\/strong>, at <strong>05\/14 11:11:14 GMT+3<\/strong>. The session high stood at <strong>98.438<\/strong>, with a low of <strong>98.298<\/strong>, an open at <strong>98.355<\/strong>, and a close at <strong>98.378<\/strong>.<\/p>\n\n\n\n<p>In the broader market, the USDX dollar index was last around <strong>98.48<\/strong>, up more than <strong>0.6%<\/strong> for the week so far. That puts the dollar on course for its strongest weekly performance since the start of the Iran war. The euro was little changed at <strong>$1.1717<\/strong>, but remained set for a <strong>0.6%<\/strong> weekly loss, which would mark its largest decline in <strong>two months<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Hot Inflation Changes The Fed Trade<\/h2>\n\n\n\n<p>The dollar rally has built on firmer US inflation data. Wednesday\u2019s producer price report showed US producer prices rising at their fastest pace in <strong>four years<\/strong>, following Tuesday\u2019s consumer inflation data, which ran at its fastest pace in <strong>three years<\/strong>. US wholesale prices rose <strong>6%<\/strong> year-on-year in April, while core producer prices rose <strong>5.2%<\/strong> from April <strong>2025<\/strong>. Energy remained the main pressure point, with gasoline up <strong>15.6%<\/strong> from March and diesel up <strong>12.6%<\/strong>.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">The yield on benchmark 10-year Treasuries rose to the highest since July after US wholesale inflation accelerated in April to the fastest pace since 2022. <a href=\"https:\/\/t.co\/NqESQ0oXSb\">https:\/\/t.co\/NqESQ0oXSb<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/2054543504244707679?ref_src=twsrc%5Etfw\">May 13, 2026<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>That inflation impulse has changed the rates story. Traders now price a <strong>31.8%<\/strong> chance that the Fed raises rates in <strong>December<\/strong>, compared with just over <strong>16%<\/strong> a week earlier, according to the CME FedWatch tool.<\/p>\n\n\n\n<p>Analysts expect the FOMC to start a tightening cycle from <strong>December<\/strong> and forecast <strong>three hikes<\/strong> in the cycle for now. The US Senate approved Warsh as Fed Chair on Wednesday, putting the <strong>56-year-old<\/strong> lawyer and financier at the helm of the central bank. Warsh returns with a broad reform agenda, though changes may take time to show in policy.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Trump-Xi Summit Becomes The Global FX Test<\/h2>\n\n\n\n<p>The Trump-Xi summit now sits at the centre of global market risk. Xi told Trump that trade talks were making progress, but warned that disagreement over Taiwan could send relations down a dangerous path. Trump described the meeting as possibly the \u201cbiggest summit ever\u201d.<\/p>\n\n\n\n<p>Currency markets reacted carefully. China\u2019s onshore yuan traded around <strong>three-year highs<\/strong>, while the offshore yuan strengthened for an <strong>eighth straight day<\/strong> to <strong>6.7845<\/strong> against the dollar. That strength shows traders are pricing a lower risk of immediate US-China trade stress, even as Taiwan remains a major fault line.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">China&#39;s Xi Jinping told President Donald Trump that trade talks were making progress at the start of a two-day summit, but warned that disagreement over Taiwan could send relations down a dangerous path <a href=\"https:\/\/t.co\/8cQqqfRXqS\">https:\/\/t.co\/8cQqqfRXqS<\/a> <a href=\"https:\/\/t.co\/RnFixlWKIH\">pic.twitter.com\/RnFixlWKIH<\/a><\/p>&mdash; Reuters (@Reuters) <a href=\"https:\/\/twitter.com\/Reuters\/status\/2054836343998427277?ref_src=twsrc%5Etfw\">May 14, 2026<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>A calmer summit tone could help global risk appetite and reduce safe-haven demand for the dollar. A tougher message on Taiwan, trade, technology, or sanctions could push traders back into defensive dollar positions. For now, the dollar is holding firm because Fed pricing is doing more of the work than geopolitics.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Technical Analysis<\/h2>\n\n\n\n<p>The US Dollar Index is continuing to trade in a broad consolidation range around <strong>98.42<\/strong>, with price action lacking strong directional conviction after the sharp decline from the March peak near <strong>100.48<\/strong>. The chart suggests the dollar is attempting to stabilise, although momentum remains relatively weak compared with earlier in the year.<\/p>\n\n\n\n<p>Technically, the market is neutral in the short term:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>MA5:<\/strong> 98.10<\/li>\n\n\n\n<li><strong>MA10:<\/strong> 98.11<\/li>\n\n\n\n<li><strong>MA20:<\/strong> 98.20<\/li>\n<\/ul>\n\n\n\n<p>The moving averages are tightly compressed and almost flat, reflecting a market stuck in equilibrium rather than trending aggressively in either direction. Price itself is oscillating directly around those averages, reinforcing the range-bound structure.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/www.vtmarketsglobal.com\/en\/wp-content\/uploads\/sites\/6\/2026\/05\/image-18-1024x504.jpg\" alt=\"\" class=\"wp-image-50141\"\/><\/figure>\n\n\n\n<p>Key levels to watch:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Immediate support:<\/strong> 98.00 \u2192 97.70<\/li>\n\n\n\n<li><strong>Major support:<\/strong> 97.00 \u2192 96.40<\/li>\n\n\n\n<li><strong>Resistance:<\/strong> 98.80 \u2192 99.40 \u2192 100.48<\/li>\n<\/ul>\n\n\n\n<p>The index has spent much of late April and May trading sideways between roughly <strong>97.70 and 98.80<\/strong>, with neither bulls nor bears managing to establish sustained control.<\/p>\n\n\n\n<p>A breakout above <strong>98.80\u201399.40<\/strong> would likely improve the short-term technical outlook and could reopen a move toward the broader March high near <strong>100.48<\/strong>. However, the dollar has repeatedly struggled to build upside momentum as traders increasingly position around expectations for eventual Federal Reserve easing later in the year.<\/p>\n\n\n\n<p>On the downside, a break below <strong>97.70<\/strong> would likely reinforce bearish momentum and expose the broader support region near <strong>97.00\u201396.40<\/strong>.<\/p>\n\n\n\n<p>The broader macro backdrop remains mixed for the dollar. Treasury yields have stabilised somewhat after recent volatility, but softer inflation expectations and cautious Federal Reserve rhetoric have limited aggressive USD buying. At the same time, global risk sentiment has improved compared with the turbulence seen earlier in the year, reducing some demand for defensive dollar positioning.<\/p>\n\n\n\n<p>Currency markets are also closely watching incoming US inflation data, labour market conditions, and Fed commentary for clues on rate timing. Any shift in rate expectations could quickly break the current consolidation structure.<\/p>\n\n\n\n<p>For now, the USDX maintains a <strong>neutral-to-slightly bearish bias<\/strong>, with the broader trend remaining soft while price stays capped beneath the <strong>99.00\u201399.40 resistance region<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Cautious Forecast<\/h2>\n\n\n\n<p>USDX keeps a mildly bullish bias while it holds above <strong>98.204<\/strong> and <strong>98.112<\/strong>. A break above <strong>98.438<\/strong> would support a move toward <strong>99.406<\/strong>, especially if Treasury yields stay firm and Fed hike pricing keeps rising.<\/p>\n\n\n\n<p>A drop below <strong>98.098<\/strong> would weaken the recovery and suggest traders are fading the latest inflation-driven dollar move. The strongest upside path needs three forces to align: hot inflation keeps Fed tightening risk alive, the Trump-Xi summit avoids a yuan-driven dollar reversal, and long-dated Treasury yields remain close to their highest levels since mid-<strong>2025<\/strong>.<\/p>\n\n\n\n<p><strong>Learn more about trading <a href=\"https:\/\/www.vtmarkets.com\/indices\" target=\"_blank\" rel=\"noreferrer noopener\">Indices<\/a> on <a href=\"https:\/\/www.vtmarkets.com\/trade-now\" target=\"_blank\" rel=\"noreferrer noopener\">VT Markets<\/a> today.<\/strong><\/p>\n\n\n\n<details class=\"wp-block-details is-layout-flow wp-block-details-is-layout-flow\"><summary><strong>Trader Questions<\/strong><\/summary>\n<p><strong>Why Is The US Dollar Rising?<\/strong><\/p>\n\n\n\n<p>The US dollar is rising because traders are pricing in stronger inflation pressure and a higher chance of Federal Reserve rate hikes.<\/p>\n\n\n\n<p>The USDX dollar index traded near <strong>98.48<\/strong>, up more than <strong>0.6%<\/strong> for the week, putting it on track for its strongest weekly performance since the start of the Iran war.<\/p>\n\n\n\n<p><strong>What Is The Current USDX Price?<\/strong><\/p>\n\n\n\n<p>USDX traded at <strong>98.423<\/strong>, up <strong>0.045<\/strong>, or <strong>0.05%<\/strong>.<\/p>\n\n\n\n<p>The session high was <strong>98.438<\/strong>, with a low of <strong>98.298<\/strong>, an open at <strong>98.355<\/strong>, and a close at <strong>98.378<\/strong>.<\/p>\n\n\n\n<p><strong>Why Are Fed Rate Hike Bets Supporting The Dollar?<\/strong><\/p>\n\n\n\n<p>Fed rate hike bets support the dollar because higher US rates can make dollar assets more attractive.<\/p>\n\n\n\n<p>Markets now price a <strong>31.8%<\/strong> chance that the Fed raises rates in <strong>December<\/strong>, up from just over <strong>16%<\/strong> one week ago.<\/p>\n\n\n\n<p><strong>How Is US Inflation Affecting USDX?<\/strong><\/p>\n\n\n\n<p>Hot US inflation is supporting USDX by reducing expectations for Fed easing and raising the chance of tighter policy.<\/p>\n\n\n\n<p>Producer prices posted their biggest increase in <strong>four years<\/strong> in April, while consumer inflation ran at its fastest pace in <strong>three years<\/strong>.<\/p>\n\n\n\n<p><strong>Who Is Kevin Warsh And Why Does He Matter For The Dollar?<\/strong><\/p>\n\n\n\n<p>Kevin Warsh is the incoming Federal Reserve Chair after the US Senate approved his appointment.<\/p>\n\n\n\n<p>Markets are watching his policy stance closely because he will inherit a central bank facing rising inflation pressure, higher energy costs, and renewed debate over whether the Fed may need to hike again.<\/p>\n<\/details>\n\n<p>\r\n\r\n<p><strong>Start trading now &#8211; Click <a href=\"https:\/\/www.vtmarketsglobal.com\/en\/trade-now\/\">here<\/a> to create your real VT Markets account <\/strong> <\/p>\r\n<!-- \/wp:post-content -->","protected":false},"excerpt":{"rendered":"<p>USDX holds near 98.4 as hot inflation, Fed hike bets and Trump-Xi talks drive dollar demand.<\/p>\n","protected":false},"author":38,"featured_media":47162,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3],"tags":[],"class_list":["post-47165","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis"],"acf":[],"aioseo_notices":[],"featured_image_src":"https:\/\/www.vtmarketsglobal.com\/en\/wp-content\/uploads\/sites\/6\/2026\/05\/USD2-1-600x400.webp","featured_image_src_square":"https:\/\/www.vtmarketsglobal.com\/en\/wp-content\/uploads\/sites\/6\/2026\/05\/USD2-1-600x600.webp","author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/47165","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=47165"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/47165\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media\/47162"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=47165"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=47165"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=47165"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}