United States Dollar Index extends decline to near 101.80 after Fed Warsh’s remarks

The US Dollar (USD) delivers a negative reaction after remarks from Federal Reserve (Fed) Chair Kevin Warsh at the Fireside Chat with International Monetary Fund (IMF) Managing Director Kristalina Georgieva.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is down 0.15% to near 101.80, the lowest level seen in 10 days.

In the event, Fed Chair Warsh stressed on achieving price stability, adding that he will make judgements at the October and December meetings. Warsh praised government policies being key driver to rising investments in the economy.

Warsh flags investment surge and AI risks but avoids pre-committing on rates

Fed Chair Warsh’s speech scores 5.6/10 on the FXS Speechtracker, modestly below the 6.1/10 established baseline, pointing to a slightly less impactful tone despite broadly steady messaging. The admission of being “over-scarred from the global financial crisis” underscores a cautious bias toward financial stability even as Warsh highlights structural growth and an investment surge driven by “good policies,” suggesting a guarded hawkish stance rather than an aggressive one. Warsh’s focus on AI, upcoming field hearings, and task forces to build new intellectual capital reinforces a forward-looking but non-committal approach, with explicit refusal to prejudge the October and December FOMC meetings keeping Dollar traders focused on data rather than guidance.

The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a level of 127.51, which keeps the overall stance firmly in hawkish territory well above the neutral 100 mark. The lack of index movement, despite the slightly softer FXS Speechtracker score, indicates that Warsh’s remarks are seen as broadly consistent with the prevailing hawkish policy framework, leaving Dollar and broader FX expectations largely intact.

Several Fed members have already stressed on containing elevated price pressures, which are hurting households.

Hammack flags inflation mindset risks as Fed tone stays firmly hawkish

Fed’s Hammack delivers a moderately hawkish message, with a 7.2/10 FXS Speechtracker score slightly softer relative to the historical average of 7.6/10 but still signaling concern over persistent price pressures. The emphasis on lower-income Americans struggling with inflation, rising input costs, and the risk of an entrenched “inflation mentality” points to openness to more aggressive policy action if inflation expectations drift higher, especially given the view that financial conditions do not yet appear restrictive and the neutral rate is uncertain.

The FXS Fed Sentiment Index slipped by 0.25 points to 127.92, indicating a modest tonal pullback but remaining well above the 100 neutral mark. This keeps the broader Fed stance in clearly hawkish territory despite the slight decline, aligning with Hammack’s caution on inflation dynamics and the potential need for firmer policy if an inflationary mindset takes hold.

US Dollar Index Technical Analysis

In the daily chart, Dollar Index Spot trades at 101.83. The near-term bias is mildly bullish as price holds above the 20-day exponential moving average (EMA) at 101.63, suggesting underlying demand after the recent recovery from sub-100 levels. The Relative Strength Index (14) at 56.79 stays in neutral-to-positive territory, hinting that upside momentum is moderating but not yet deteriorating.

On the downside, initial support is defined by the 20-day EMA at 101.63, which acts as the primary technical floor while the index consolidates above it. As long as this level contains pullbacks, the broader constructive tone is likely to persist, though a decisive break lower would signal that the bullish phase is losing traction.