Following the strengthening formed after the FOMC announcement earlier this morning, the US Dollar added to the increase thanks to the release of US GDP data some days ago (January 27). 

The USD rose by 0.67% to 97.18, its the highest position since July 2020. The economic growth in America regained it’s momentum in the last quarter of 2021. 

Besides that, the United States Commerce Department reported that Advance GDP jumped from 2.3% to 6.9% from the previous quarter. The gain was higher than expectations of 5.3%.

They are getting a strong boost from the inventory accumulation, and that's driving growth. It was said by Sung Won Sohn, a financial expert at Loyola Marymount University in Los Angeles. 

The huge budget have been spent before. The Biden administration has stimulated the economy excessively and the Fed supports that effort.

Market is Quite Optimistic to the Fed’s Tightening 

A day after the Fed's readiness to raise rates in March, markets ramped up their expectations of the frequency of rate hikes this year. After estimating four times, market participants now expect a rate increase of five times.

Jerome Powell did confirm that a rate hike is needed by the U.S. economy at this time. However, he also stressed that the organization has not actually made any decision.

It was regarding on how many basis points of increase is needed. The Fed chairman said only that the central bank would not rule out discussions on the matter.

The Fed can be more Sensitive to the Market 

Although the market had anticipated a rate hike, many people assumed that the Fed would become more sensitive to equity markets, when it actually wasn't. It was said by Jane Foley.

Jane itself is an analyst at Rabobank. Furthermore, The Fed also mentioned that the balance sheet has stolen the attention of the market, especially about stimulus withdrawals.

Foley added that the shock the dollar experienced earlier in the month was too long. That also made the Greenback is more sensitive to the latest hawkish signals from the Fed.

The USD index (DXY) could potentially close trading this weekend with the best performance over the past few months. The analysts are still looking for some possibilities.

The Speculation is getting Wild Among the Participants 

After being spurred by the announcement of the results of the very hawkish FOMC meeting, the greenback is increasingly moncer following the release of U.S. GDP data yesterday. 

As the news was written, DXY had perched at the level of 97.39 – a record high since July 2020. Expectations around a Fed rate hike are getting crazy right now. 

A number of market participants began for speculating about the chance of five or six "Fed rate hikes" this year. That was more than previous expectations of three to four.

Inevitably, the USD rate strengthened rapidly As well. So far this week, the U.S. dollar has rallied about 1.7% against the euro to EUR/USD at 1.1125, it became the low record since June 2020.

US Dollar Projection and it’s Rally Possibility 

The greenback also gained nearly 2 per cent each against the Aussie and Kiwi. Only GBP/USD appears to have put the brakes on the downturn, as the Bank of England (BoE) is most likely to raise interest rates in next week's meeting.

Don't fight the Fed. Don't fight the market as Terence Wu, an analyst at Singapore's OCBC Bank said. The dollar may rally towards the next target to the 97.70/00 zone on the DXY Index.

Then, after which technical resistance is scarce to near 100.00. The Antipodean led the weakness against the dollar year-to-date, expecting the euro and yen to follow suit.