US Dollar Index holds near 100.00 as hot PPI and Fed decision dominate

DXY edged up about 0.3% on Wednesday, trading around 99.85 in a session dominated by the hotter-than-expected Producer Price Index (PPI) print ahead of Wednesday's Federal Reserve (Fed) decision. The index has rallied sharply from early-March lows close to 97.00, reclaiming the 100.00 handle last week before pulling back slightly into a tight range of small-bodied candles just below that round number.

Wednesday morning's PPI data showed wholesale prices rose 0.7% MoM in February, more than double the 0.3% forecast, with the YoY figure jumping to 3.4% against expectations of 2.9%. Core PPI, excluding food and energy, came in at 3.9% YoY versus 3.7% expected. Crucially, this data largely predates the escalation of the Iran conflict, meaning the energy-driven price pressures from surging crude (West Texas Intermediate is trading near $98 per barrel) have yet to fully filter through. The report reinforces the case for the Fed to hold rates at 3.50% to 3.75% this afternoon and may tilt Chair Jerome Powell's messaging in a more hawkish direction.

Markets are now pricing just one cut for 2026, with the first move not expected until September at the earliest. The updated Summary of Economic Projections (SEP) and dot plot will be closely watched for any upward revision to the inflation outlook or a shift in the median rate path. Powell's press conference, likely one of his last before stepping down in May, will be the main event for traders looking for guidance on how the Fed weighs the stagflationary risks from elevated energy prices against signs of labour market softening.

DXY daily chart

Technical Analysis

In the daily chart, Dollar Index Spot trades at 99.83. The near-term bias is mildly bullish as price holds above the rising 50-day exponential moving average near 98.50 and challenges the 200-day exponential moving average around 99.05. The recent close above both averages confirms an improving trend structure after consolidating below the longer-term average through most of the period. Stochastic remains elevated in the 80s, signaling strong upside momentum, though its plateau warns that follow-through may slow if buyers fail to extend gains decisively.

Initial support emerges at the 99.00 area, where the 200-day average aligns with the latest breakout zone, followed by the 50-day average near 98.50, which protects the prior consolidation band. A break below 98.50 would weaken the bullish case and expose deeper pullback risk toward 98.00. On the upside, immediate resistance sits at the psychological 100.00 handle, just above the recent 100.50 high, where overbought stochastic conditions could invite profit-taking. A daily close above 100.50 would open the way for a more extended bullish phase, reinforcing the current upward bias.

(The technical analysis of this story was written with the help of an AI tool.)