The US dollar index fluctuates upward, approaching a four-week high

On February 25, 2026, the US Dollar Index fluctuated upward, closing at 97.95 in the Asian session, up 0.12%, approaching a four-week high. The intraday trading range was between 97.82 and 97.98. Its movement was mainly influenced by the Federal Reserve’s cautious stance on interest rate cuts, changes in US tariff policies, and global risk aversion sentiment. In the short term, the dollar remains relatively strong, but long-term depreciation pressures persist.

Fundamentally, the market’s subdued expectations for Fed rate cuts support the dollar. In February, expectations for rate cuts cooled, and the January meeting minutes reinforced the central bank’s “wait-and-see” signal. The Fed views inflation returning to 2% as key to rate cuts. The US December core PCE rose 3% year-over-year, exceeding expectations, with core service prices continuing to rise, further reinforcing a cautious stance. The probability of a rate cut in March is very low, with the market expecting rates to stay between 3.50% and 3.75%.

US tariff policy negotiations indirectly benefit the dollar. Recently, the Supreme Court ruled that some tariffs imposed by the Trump administration exceeded authority, which could lead to a 5 percentage point reduction in tariffs and a $175 billion tax refund. However, Trump stated he would impose a temporary 15% tariff to maintain the current level. Policy uncertainty has increased demand for safe-haven assets, benefiting the dollar, a traditional safe-haven.

Additionally, shifts in Federal Reserve officials’ positions and a rebound in US stocks have supported the dollar. Dovish-leaning Fed official Stephen Milun raised expectations for rate cuts, reflecting confidence in economic resilience. US stock indices closed higher, with the Nasdaq rising over 1%, highlighting the relative strength of the US economy and indirectly supporting the dollar.

Technically, the dollar index shows short-term strength. Since mid-February, it rebounded from 95.56 to 97.95. The four-hour chart indicates moderate bullish momentum, with short-term support at 97.80. If it holds, testing 98.05 is possible. Resistance is concentrated between 98.00 and 98.05. However, the long-term trend remains downward, with a double top formation suggesting a target around 80–85. The short-term rebound is unlikely to reverse the overall downtrend.

Looking ahead, the dollar is expected to remain relatively strong in the short term, depending on Fed policies, tariff implementation, and inflation data. Institutions believe that short-term policies and risk aversion will support the dollar, but long-term pressures from fiscal deficits, rate cut cycles, trade deficits, and de-dollarization remain. Investors should monitor inflation, officials’ speeches, and tariff developments, remaining alert to potential pullbacks.