The Federal Reserve's September 16, 2026, 25-basis-point hike to the 3.75%-4.00% target range, paired with a hawkish dot plot showing a 4.1% median end-2026 funds rate and expectations for at least one additional increase, served as the dominant driver lifting the DXY. Persistent inflation—with headline PCE near 3.7% and CPI at 3.4% year-over-year—combined with resilient growth, firm labor data, and elevated Treasury yields reinforced the policy shift. Geopolitical tensions supporting higher oil prices added further upward pressure on the dollar. These factors propelled DXY from sub-100 levels early in the month to closes above 101.45 by September 30, reflecting trader repricing of the monetary policy path and relative rate differentials.