Dollar Remains Strong; PCE Data to Be the Deciding Factor

The US Dollar Index (DXY) held above the psychological 102.00 level during Thursday’s (October 29) trading session, though it struggled to extend gains seen earlier in the Asian session. The index remains near a two-week high following the Federal Reserve’s decision to keep interest rates unchanged, accompanied by a relatively hawkish policy tone.

Market focus has now shifted to the preliminary US third-quarter Gross Domestic Product (GDP) figures and the Personal Consumption Expenditures (PCE) price index, both scheduled for release today. Data coming in stronger than expected could bolster expectations for an interest rate hike in December and push the DXY higher, while weaker-than-anticipated results might temper the dollar’s ​​momentum.

The Fed’s decision to maintain rates was reached with a 10–2 vote, with two officials favoring a 25-basis-point increase. Fed Chair Kevin Warsh emphasized that the central bank remains vigilant regarding inflationary pressures and geopolitical risks, leading the market to anticipate a continued trend of tight monetary policy.

Geopolitical uncertainty in the Middle East is also providing support for the dollar. While diplomatic efforts between the United States and Iran are underway, the threat of military action has not entirely subsided, keeping demand for the dollar—viewed as a safe-haven asset—elevated.

From a technical perspective, the DXY faces resistance near the 102.55 level. Should the index manage a sustained breakout above this point, the potential for further gains toward the October highs would increase. Conversely, any downward correction is likely to remain limited, as the Fed’s hawkish stance and ongoing geopolitical risks continue to underpin the dollar.