US Dollar Index Storms to One-Year High as Pound Sinks

US Dollar Index strength has become the pressure point across FX, with the DXY firming near 100.80 on Thursday, its highest level since May 2025, after the Federal Reserve held rates steady and the Pound slid on a Bank of England hold.

The move came after the Federal Reserve left interest rates unchanged in the 3.50%-3.75% range at Kevin Warsh’s first policy meeting as Fed Chair, according to FXStreet. The shared thread in this Forex Today roundup is simple: several central banks are pausing, but currencies are reacting very differently to what those pauses imply.

Dollar bulls seize control as the US Dollar Index tests 100.80

The US Dollar Index pushed near 100.80 on Thursday, a level not seen since May 2025, as the Greenback advanced against major peers. Among the currencies under pressure, the British Pound stood out after the Bank of England decision.

That matters because the rally was not tied to a surprise rate increase. The Fed held steady. The signal came from the market’s reading of a central bank that still wants more evidence before declaring inflation beaten.

The message cuts both ways. It does not promise another hike. It also does not offer an easy path to cuts. For the dollar, that was enough.

Warsh’s first Fed meeting gives the dollar a steady-rate signal

Kevin Warsh’s first Fed meeting delivered continuity: no rate change, no dramatic pivot, and no rush toward easing. The Fed left rates in the 3.50%-3.75% range, and markets treated the decision as a steady-rate signal rather than an opening for quick cuts.

The data backdrop was not presented in the supplied source with enough detail to make a precise labor-market call. The cleaner read is narrower: traders focused on the Fed’s ability to stay patient while the dollar benefited from the absence of a dovish surprise.

That helps explain the reaction. The dollar’s move looks less like a bet on an immediate Fed move and more like a bet that the Fed can remain cautious while other central banks face their own domestic constraints.

Analysis: the Greenback was supported because the Fed hold did not undermine the case for patience. In a market looking for confirmation that easing is not imminent, steady policy can still be dollar-positive when peers are struggling for traction.

Pound weakens after the Bank of England keeps rates on hold

The Pound took a clear hit after the Bank of England left interest rates unchanged at 3.75%. GBP/USD traded near a two-month low area as Sterling failed to draw support from the policy decision.

The exact vote split and dissent details are not included in the supplied source material, so the important point is the market reaction rather than the internal mechanics of the decision. The BoE held, Sterling weakened, and traders treated the outcome as insufficient to offset broader dollar strength.

The contrast with the Fed is the useful part. Both central banks held rates. The dollar climbed, while Sterling weakened. Based on the supplied source, the difference was not the headline decision but the surrounding policy message and the market reaction to each currency’s domestic setup.

Analysis: the BoE hold left GBP without a clear bullish catalyst. With the dollar already firm, a steady Bank Rate was not enough to protect Sterling from renewed selling pressure.

GBP/USD gets squeezed by a firmer dollar and limited Sterling support

GBP/USD is being pressed from both sides: the dollar is firm, and the Pound is struggling to find domestic backing after the BoE decision. The pair traded close to the two-month low area cited by FXStreet, keeping the focus on whether Sterling can find a fresh catalyst.

The source does not provide positioning data or technical levels beyond that broad price zone, so the clean read is narrower: dollar strength is doing most of the visible work, while the BoE hold failed to protect Sterling.

The pair’s next test depends on whether incoming UK and global data reinforce the BoE’s patient stance or challenge it. Without a clear domestic offset, GBP/USD remains exposed to the broader US Dollar Index move.

Analysis: a short-term GBP/USD rebound would need either softer dollar conditions or a Sterling-positive UK catalyst. Without one, the pair stays vulnerable to the same dollar pressure that drove the wider FX move.

Euro and yen traders face the same dollar problem

EUR/USD remained under pressure as broad US Dollar strength dominated the session. The supplied material does not provide enough detail to make a precise call around European Central Bank commentary, so the euro story is best framed through the dollar leg.

That keeps the euro tied to the same problem as Sterling, but through a different channel. The euro is not reacting to a fresh ECB rate decision in this feed. It is reacting to a dollar rally that has become the common driver across major pairs.

USD/JPY also reflected renewed Greenback demand. The supplied source material does not support a specific level-based intervention call, so the cleaner read is that yen traders faced the same broad dollar impulse seen elsewhere in FX.

For more detail on the yen side of this move, see our related piece on USD/JPY intervention risk.

Aussie, oil and gold show how broad the dollar move has become

The dollar move was not limited to Europe. AUD/USD traded with a muted tone as the Australian Dollar struggled to extend gains while the US Dollar remained supported by the post-Fed market read.

WTI Oil was little changed in the broader setup. The supplied material does not support a specific price level or a detailed geopolitical agreement, so oil is better treated as a background factor for inflation expectations rather than the main driver of Thursday’s FX move.

Gold struggled to gain traction as firm dollar conditions made it harder for non-yielding assets to rally. The source material does not provide enough support for a precise gold level, but the market logic remains practical: a stronger dollar can make gold less attractive at the margin.

The commodity read is straightforward. A stronger dollar can limit upside for gold and commodity-linked currencies, while stable oil conditions reduce one source of immediate safe-haven demand. That leaves the US Dollar Index as the center of gravity.

Friday’s docket gives traders the next test after the DXY surge

The immediate calendar is not presented in the supplied source with enough detail to list a firm Friday docket. That means the next test is less about one named release and more about whether incoming data changes the market’s post-Fed and post-BoE interpretation.

The US Dollar Index has moved quickly, so the next phase needs confirmation. If incoming data supports the Fed’s patient stance, DXY can keep pressure on EUR/USD, GBP/USD and USD/JPY. If the data undercuts the case for caution, the dollar rally becomes more vulnerable to a fade.

For the Pound, the focus is whether UK data can challenge the market’s downbeat read after the BoE hold. For the euro and yen, the question is whether dollar momentum remains strong enough to keep pairs moving even without a fresh domestic policy shock.

Analysis: the market does not need a rate hike to keep buying dollars. It needs evidence that the Fed has less reason to ease than its peers, or at least enough uncertainty to stay on hold.

The bigger picture

Central-bank pauses are producing different currency outcomes. The Fed held rates and the US Dollar Index touched a one-year high near 100.80. The BoE held rates and GBP/USD sank toward a two-month low area.

That is the signal across this Forex Today setup. Today’s rate decision matters less than what traders think the next decision could be. The Fed’s steady-rate message kept the dollar in control, while the BoE hold left Sterling exposed.

The practical watch item now is whether incoming data changes the post-BoE read. If it doesn’t, the dollar remains the center of gravity. If the data challenges the current setup, the DXY move near 100.80 becomes less a breakout and more a level the market has to defend.

Disclaimer: This XOOMAR analysis is for informational and educational purposes only. It is not financial, investment, legal, tax, or professional advice. It does not provide buy, sell, hold, price-target, portfolio, or personalized recommendations. Verify information independently and consult qualified professionals before making decisions.

The Bottom Line

• The US Dollar Index reaching 100.80 signals renewed dollar strength across major currency pairs.
• The Fed’s steady-rate stance suggests markets may not get a quick path to rate cuts.
• Sterling weakness after the Bank of England hold shows central bank pauses can still trigger sharp currency moves.

Originally published on XOOMAR. For more news and analysis, visit XOOMAR.