The US Dollar Index rises modestly as traders await Wednesday’s FOMC minutes for clarity on interest rate outlook amid mixed economic signals.
The US Dollar Index (DXY) extended its rebound from a two-month low, trading above 99.50 in early European trading on Tuesday. The index reached a daily high near 99.70 but lacked strong momentum as investors weighed conflicting signals on US monetary policy.
Last week’s softer US inflation and weaker consumer spending data reduced expectations for near-term Fed rate hikes. However, rising energy prices and persistent inflation concerns keep markets on edge, with Wednesday’s FOMC minutes seen as a key catalyst for direction.
Analysts suggest reduced Fed tightening expectations may limit dollar upside, though oil prices, bond yields, and geopolitical risks remain wildcards. The minutes will be scrutinized for policymakers’ views on inflation and rate-hike support beyond the three regional Fed presidents reportedly favoring higher rates.