FX.co ★ Dollar Firms Up on Hawkish Fed Outlook

The dollar index remained above 100 on Thursday, extending the sharp rebound from the previous session, as markets reacted to a more hawkish Federal Reserve outlook. As expected, the Fed left the federal funds rate unchanged but emphasized the uncertain economic impact of the Iran war and highlighted persistent upside risks to inflation.

Policymakers signaled that rate cuts will not begin until there is clearer evidence that inflation is easing, while still projecting one reduction this year and another in 2027, in line with their December forecasts. Supporting the hawkish tone, data released on Wednesday showed that US producer prices rose more than anticipated in February.

Investors are now focused on the latest weekly jobless claims for additional signals on labor market conditions. At the same time, oil prices moved higher amid continued attacks on energy infrastructure across the Middle East as the Iran conflict persists. In response to rising energy costs, President Donald Trump temporarily waived the Jones Act to lower the cost of transporting oil, gas, and other commodities within the United States.