The US dollar rose by about 1.1% this week, on track for its best weekly performance in three months.

The US dollar is set for its best weekly performance in three months after the Federal Reserve signaled further interest rate hikes. Driven by solid US economic growth and the Fed’s post-hike anti-inflationary stance, the US Dollar Index (DXY) rose by approximately 1.1% this week. Following the Federal Reserve’s first rate hike in more than three years, JPMorgan, Standard Chartered, and Brown Brothers Harriman all believe that this decision has eliminated the biggest obstacle facing a stronger US dollar. On Wednesday and Thursday, the DXY consolidated near its 200-day moving average, and on Friday it edged modestly above this key level. Historical data show that when the DXY’s daily closing price breaks above the 200-day moving average, the dollar typically rises further. Previously, in March and June, the index strengthened even further after breaking through that moving average. The DXY gave up part of its weekly gains after the Japanese yen pared losses on reports that the Bank of Japan conducted a "rate check." Previously, the index could have recorded its biggest weekly gain since the outbreak of the Iran war in March. The Bank of Japan’s rate checks are typically seen as a precursor to official intervention.