US Dollar Index Steady Above 98.00 Amid Geopolitical Tensions and Fed Uncertainty

Dollar Trades Flat Ahead of Fed Rate Decision

The US Dollar Index (DXY), which measures the strength of the US Dollar (USD) against a basket of six major currencies, traded flat around 98.15 in early European trading on Monday. Investors remain cautious ahead of the Federal Reserve’s interest rate decision scheduled for Wednesday, with no change expected.

“If the Fed gives us a dovish hold as we expect, the dollar should continue to soften,” said Win Thin, Global Head of Market Strategy at Brown Brothers Harriman.

Middle East Tensions Provide Support

Despite a quiet USD session, heightened geopolitical tensions in the Middle East are acting as a supportive factor for the Dollar. Safe-haven demand has picked up slightly as investors monitor Iran-Israel conflict developments, which continue to drive risk aversion globally.

Inflation Outlook and Rate Expectations

According to Reuters, market participants are currently pricing in an 80% probability of a September rate cut, with another potentially following in October. However, the FOMC Press Conference will provide key forward guidance this week.

Consumer Sentiment Bounces in June

On a positive note for the Greenback, the University of Michigan Consumer Sentiment Index rose to 60.5 in June, from 52.2 in May, exceeding expectations. The data reflects improved confidence as US-China trade tensions eased, potentially offering short-term support to the Dollar.

Related Links (Internal for Tredu.com)

• Live DXY Chart and Analysis
• June 2025 FOMC Preview
• Middle East Conflict Impact on FX

Outlook

With the Fed expected to maintain rates, all eyes are on the tone of the policy statement and press conference. The DXY may stay range-bound unless surprises emerge from the FOMC or geopolitical events escalate further.