Dollar rally extends as risk-off mood deepens

The US dollar extended its broad-based rally on Wednesday as risk-off sentiment deepened across global markets, with traders favoring the greenback amid heightened uncertainty.

The dollar index (DXY) held near multi-year highs, supported by expectations that the Federal Reserve may need to hike rates in 2026, while equity markets remained vulnerable. Commodity-linked currencies were the biggest losers: the Australian dollar, New Zealand dollar, and Canadian dollar all weakened. In contrast, traditional safe havens like the Japanese yen held relatively steady. USDJPY traded above the rising 100-hour moving average at 161.515 but remained below the 2024 high at 161.95. A break above that level would put the pair at its highest since early 1987.

For forex traders, the dollar's strength reflects a classic risk-off rotation driven by rate differentials and safe-haven demand. The divergence between a potentially hawkish Fed and more dovish central banks elsewhere continues to support the greenback. Traders should monitor key resistance levels on USDJPY and the DXY, as a sustained break higher could signal further dollar gains. For current pricing context, check NowPrice's FX page.

Looking ahead, market participants will focus on upcoming US economic data, including durable goods orders and GDP revisions, which could reinforce or challenge the Fed's tightening expectations. Any shift in risk sentiment or central bank commentary could trigger sharp moves in currency pairs, particularly against commodity currencies and the yen.