The market is already over the tapering and start to price in 2022 rate increases. As the Fed dot plot suggests, the first-rate increase is expected to be at the end of 2022. But a December rate hike was already priced in before the last FOMC meeting. Since the start of October market expectation for the first-rate hike has been brought forward. November rate hike probability increased from %63 to %95 and September rate hike probability increased from %52 to %79. The strong increase was not only for the US but for the EU and the UK as well. But continuous speeches done by ECB members and president Lagarde about ECB should not rush to needless tightening because the inflation will most likely be temporary, reduce to September 2022 hike probability to %58.
Because of the different tone of central banks between ECB and FED, the dollar index continues its uptrend that started in September. 94.2 can be followed as major support for the short-term. As long as the trend resumes and the ECB staying dovish, the dollar index’s bullishness may continue as well.