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The U.S. Dollar Index (DXY) is hovering near a crucial juncture as markets prepare for the release of the Federal Open Market Committee (FOMC) minutes on February 18, 2026. After a volatile start to the year, the index is testing the psychological 97.00 level, leaving traders to anticipate whether it will push higher toward 98.00 or retreat toward the mid-95s.
Fed Dissent Sparks Market Watchfulness
At the January FOMC meeting, interest rates were held steady at 3.5%–3.75%, but the decision highlighted growing division within the committee. Some members voted for an immediate rate cut, a move that traders will scrutinize in the minutes for any hints of a more dovish stance. Should the minutes reveal broader support for rate reductions, the dollar could face downward pressure.
Economic Assessment: Steady but Data-Dependent
Despite the internal split, the Fed upgraded its economic outlook from “moderate” to “solid,” reflecting a stabilized labor market at 4.3%. Officials emphasized a cautious, data-driven approach to future policy moves. Investors will also be looking for insights into the neutral rate, which could indicate whether further rate cuts are likely, influencing the dollar’s near-term trajectory.
Technical Outlook: Three Possible Paths
The Dollar Index is currently trapped in a tight range, and the FOMC minutes are likely to trigger one of three scenarios:
1. Hawkish Surprise – Dollar Gains
If the minutes emphasize a strong economy and elevated inflation without signaling urgent rate cuts, the DXY could rise. A break above 97.00 may test 97.75, with a potential stretch target near 98.20.
2. Dovish Pivot – Dollar Weakens
If concerns about the labor market or expectations of multiple rate cuts surface, the dollar may slip. A drop below 96.40 could open the way for a retest of the 96.00 floor and possibly slide toward 95.40.
3. Status Quo – Consolidation Continues
If the minutes largely echo previous statements without new insights, the index may remain range-bound between 96.80 and 97.50 until the next major market catalyst.
The DXY sits at a critical tipping point. While long-term trends suggest a potential decline, short-term hawkish signals could push the dollar higher. Traders should watch the 96.80 support and 97.75 resistance levels closely as the market reacts to the upcoming FOMC minutes.
