The Fed has 18 voting and non-voting members. Four times a year they each privately submit their best guess for where interest rates should be at the end of each year. Nobody knows whose dot is whose. The chart of all those anonymous guesses is the dot plot.

It is not a promise. It is not policy. It is a signal. When the median dot moves up it means policymakers collectively think rates need to be higher than they previously thought. When it moves down it means the opposite.

In March the median dot implied one cut in 2026. After Wednesday it implied one hike. That is not a small shift. The entire direction of anticipated policy flipped in a single meeting. Markets reprice hard when that happens.

One important caveat: the dot plot has a poor historical track record as a prediction. The Fed is data dependent by design. When conditions change rapidly, a pandemic, a war, an energy shock, the dots have consistently been wrong, often by a wide margin. Projections from 2013 and 2014 forecast rates rising much faster than they did. The 2021 dots badly underestimated how high rates would need to go. The dots are not a promise of where rates will be. They are a snapshot of where policymakers think they should be today, based on what they know today. The data changes. The dots follow. What matters is not whether Wednesday's hike projection actually happens, it may not, but that the collective thinking of the committee shifted decisively in one direction. That shift moves markets now, even if the hike never arrives.

The DXY, or dollar index, measures the value of the US dollar against a basket of six major currencies: the euro, the Japanese yen, the British pound, the Canadian dollar, the Swedish krona, and the Swiss franc. The euro carries the most weight at about 57 percent of the basket.

Think of it as a simple scoreboard. When the DXY goes up the dollar is getting stronger relative to those currencies. When it goes down the dollar is weakening. It does not measure the dollar against every currency in the world but it is the most widely followed benchmark for overall dollar strength.

A reading of 100 is roughly the historical average. Above 100 means the dollar is stronger than its historical norm. The DXY hitting 101.09 this week means the dollar is meaningfully above that baseline, which is exactly what you would expect after a hawkish Fed surprise.

When US interest rates are high relative to the rest of the world, dollar-denominated assets pay more. A US Treasury bond yielding 4 or 5 percent is more attractive than a German or Japanese bond yielding 2 percent. To buy that US bond an investor outside the US has to first buy dollars. More demand for dollars, higher dollar.

When the Fed signals rates are going up rather than down it is telling the world that dollar-denominated assets are going to keep paying well. That brings capital in. Capital inflows strengthen the currency.

Wednesday's dot plot said: we are not cutting. We may be hiking. That is a strong signal that dollar yield stays attractive. The DXY moved from 99.67 to 100.52 on Wednesday alone, then continued higher to a weekly high of 101.09 by Friday. That is a significant multi-day move for a major currency index.

Bitcoin and gold are both priced in dollars. When the dollar strengthens it takes fewer dollars to buy the same amount of real-world value. So the dollar price of those assets tends to fall even if the underlying value has not changed. This is the mechanical effect.

There is also the opportunity cost effect. When rates are high and rising, cash and short-term bonds pay real returns. Money that might otherwise sit in speculative assets like Bitcoin or gold has a genuine alternative. The higher rates go the harder it is for non-yielding assets to compete.

Bitcoin fell from $66,000 to $64,000 on Wednesday, then continued lower to $62,200 on Thursday before retesting that level on Friday. Gold saw a similar pullback. Neither has recovered to pre-FOMC levels as of Friday close. The Fear and Greed Index sits at 15. Extreme fear.