US Dollar (DXY) Jumps Past 100.00: Fed Rate Cut Bets Fall & Strong US Data. Will this Continue Throughout Q4?

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The US Dollar has pushed beyond the 100.00 psychological level today as markets still price in a more hawkish policy from the Federal Reserve moving forward.

Interest rate futures now suggest there's about a 70% chance the Federal Reserve will cut its main interest rate in December. This is a noticeable drop from the nearly 90% chance calculated before the Fed's policy meeting last week.

This lowered expectation of a rate cut has made traders less keen to sell the US dollar, causing the currency to recover some of its recent losses. Even so, the dollar is still weaker overall this year, currently down about 8% compared to where it started the year, though it was down nearly 11% in September.

Essentially, the market still expects the dollar to weaken over the longer term, but the immediate pressure to sell has eased a bit.

This was helped further today by US ADP and PMI data, both of which exceeded expectations.

US private businesses hired more people in October 2025, adding 42,000 jobs. This was a positive turnaround after companies had cut a revised 29,000 jobs in September, and it was better than the 25,000 jobs that experts predicted.

In terms of wages, the annual pay raise for workers who stayed in their jobs remained flat at 4.5%. For those who changed jobs, the pay increase also held steady at 6.7%. According to the chief economist at ADP, Dr. Nela Richardson, this stable pay growth for over a year suggests that the number of workers available (supply) is now matching the number of jobs needed (demand).

ADP data has become even more important as the US Government shutdown rumbles on.

Looking at the PMI data, the service sector of the US economy grew much faster in October 2025. The key indicator, the ISM Services PMI, jumped to 52.4 from 50 in September, which was better than expected and showed the strongest growth since February. This boost was largely due to a sharp increase in both business activity and new orders.

This is a big positive for the US given that the economy is largely service driven and not manufacturing driven.However, companies are still hesitant about the future. The number of people employed continued to shrink (indicated by a reading of 48.2), showing businesses aren't confident enough to start widespread hiring yet.

The ISM Chair, Steve Miller, noted that while there were no massive layoffs, several companies mentioned the past federal government shutdown as a source of concern impacting business and potentially leading to future job cuts. Additionally, companies are finding it easier to keep up with demand, as the backlog of orders continued to drop (a reading of 40.8), marking a three-and-a-half-year trend where companies have more than enough capacity to handle new business and reduce their existing backlogs.

Finally, price pressures slightly increased, with companies reporting that tariffs are continuing to drive up the cost of goods and services they purchase.

Despite the US Dollars recent renaissance, a recent poll showed that 30 out of 45 currency strategists believe US dollar positioning will be net-short at end-November.

This was backed up by a recent Reuters survey, where forecasters were cautious, with many sharing the opinion that the US Dollar could end up being weaker than they currently predict. A slight majority of experts (about 53%) think the dollar is more likely to fall further.

One of the key reasons cited in the survey is politics. The risk according to survey participants is that as the current US administration stays in power, it will have increasing political influence over the Federal Reserve as it appoints more members to the Fed Board (Fed Chair Powell's term is up in March 2026 i believe).

The current administration is seen as more assertive in using that control, which is why many analysts forecast the Fed will lower interest rates significantly, causing the dollar's value to drop over time.

As for the US Dollar against other major currencies, the survey revealed that analysts expect the Euro will get slightly stronger, rising by just under 3% to 1.18 against the USD in the next three months and hitting 1.20 in six months. The prediction for a year from now remains stable at 1.21, a figure that hasn't changed much in four months.

From a technical perspective, the US Dollar index has finally breached the 100.00 level after 3 months.

The previous foray above the 100.00 mark was met with swift selling pressure.

Will this time be different?

At present the 200-day MA may play a big role as price is currently testing the 100.38 handle where the 200-day MA rests.

A break above this MA will be the first time price trades above it since March the 5th.

This would be a big deal and could embolden buyers which could push the US Dollar index higher. However, the period-14 RSI is now trading in overbought territory and could lead to some profit taking which could lead to a short-term pullback.

For now immediate support is found at 100.00 and the 99.57 handle. A daily candle close below the 98.65 handle would lead to a change in structure and put bears back in the conversation.

US Dollar Index Daily Chart, November 5, 2025

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