US Dollar Defends 101.80 Ahead of Fed Minutes

The dollar index-backed UUP ETF has been edging higher, closing at 29.04 on Oct. 7 after a 28.90 finish the previous session. Technically, the fund remains above its 50-day moving average of 28.29 and its 200-day average of 27.77, a sign the broader trend has not broken down. But momentum is stretched: the RSI reading of 79.5 points to overbought conditions, while the ETF is trading near the upper end of its Bollinger Band range. That leaves the market vulnerable to a pullback if the Fed minutes disappoint dollar bulls.

Macro signals are mixed. The 10-year US Treasury yield is around 5.29%, near the upper end of recent moves, which would normally support the dollar by widening the rate advantage over peers. But Fed funds expectations still point to 3.726% next month, implying investors do not see a tightening cycle that is strong enough to produce a sustained leg higher in yields. In other words, the market is leaning on carry, but not on a fresh policy shock.

Commodity and cross-asset flows also matter. Oil prices have recovered on storm-related supply concerns, which can add to inflation anxiety and temporarily support the dollar. At the same time, bond-market positioning looks defensive: Adalytica’s US Treasury bonds trade signals show sentiment at 22, or “Fear,” while awareness remains elevated, suggesting investors are still hedging duration risk rather than embracing a clear macro trend. That combination argues for choppy trading rather than a one-way move.

For investors, the key question is whether 101.80 in the dollar index becomes a floor or a false bottom. A hold above that zone would keep the recent rebound intact and favour dollar longs versus lower-yielding currencies. A break lower would suggest the Fed minutes were not hawkish enough to sustain the rally, opening the door to profit-taking in the dollar and relief in gold, equities and emerging-market assets that are sensitive to US rate pressure.