The US Dollar Index (DXY) faced renewed pressure during Thursday’s trading (October 22, 2026), marking its third consecutive day of decline as expectations grow that the Federal Reserve will keep interest rates unchanged at next week’s meeting.
The US Dollar Index (DXY)—which measures the greenback’s strength against six major currencies—hovered around the 101.50 level during the European session. According to the CME FedWatch Tool, as cited in market reports, participants see an approximately 84% probability that the Fed will hold interest rates steady during its October 27–28 meeting, while the likelihood of a rate hike in December remains around 90%. This uncertainty regarding the future path of monetary policy has led investors to adopt a cautious stance toward the US dollar.
Downward pressure on the dollar intensified following US economic data indicating a slowdown, particularly within the housing sector. New home construction fell by 5.2% in September to an annualized rate of approximately 1.22 million units, while pending home sales dropped to an all-time low. These figures reflect weakening demand for property, driven by high financing costs and elevated interest rates. Such data reinforces the view that the Fed must weigh the risks of an economic slowdown before proceeding with further monetary tightening. However, Fed Chair Kevin Warsh has yet to provide clear guidance on the timing or necessity of the next interest rate hike, leaving the future direction of policy a key focus for the market.
Conversely, the decline of the US dollar may be tempered by a resurgence in global oil prices, fueled by geopolitical tensions in the Middle East. A drone attack on Saudi Aramco’s Shaybah oil field—reportedly resulting in two fatalities—has heightened concerns regarding the security of global energy supplies. Meanwhile, Ukrainian strikes on Russian oil infrastructure have further increased the risk of disruptions to energy distribution. A surge in oil prices has the potential to intensify inflationary pressure in the U.S. and bolster expectations for a Federal Reserve interest rate hike in December. Investors are currently monitoring oil price movements, employment data, and U.S. business activity indicators to gauge the direction of the dollar ahead of next week’s monetary policy decision.
Solidnews Point of View
The weakening of the U.S. Dollar Index (DXY) suggests that concerns regarding an economic slowdown are beginning to weigh on the greenback, even as the risk of inflation—driven by rising oil prices—remains elevated.
This situation presents a dilemma for the Federal Reserve. On one hand, a weakening housing sector indicates that high interest rates are beginning to burden economic activity. On the other hand, rising energy costs could keep inflation above the central bank’s target, limiting the scope for policy easing.
From a technical perspective, the 101.50 area serves as a key support level for the U.S. Dollar Index. Should the DXY consistently break below this level, selling pressure could extend toward 101.00. Conversely, a recovery above 101.80 could pave the way for a rebound toward the psychological resistance range of 102.00–102.30. These levels should be viewed as points to monitor rather than definitive price targets.
Newsmaker’s Conclusion: The U.S. dollar remains under short-term bearish pressure, fueled by growing expectations that the Federal Reserve will hold interest rates steady in October. However, a surge in oil prices and persistent inflation risks could provide support for the dollar toward the end of the year. For gold, a weaker dollar may create an opportunity for gains; however, rising Treasury yields and expectations of sustained high interest rates remain risks that could cap any price recovery.