US Dollar Index Holds Firm Above 99.00 on Renewed US-China Trade Optimism

US Dollar Index Rises Above 99.00 on Positive US-China Trade Developments

US-China Trade Talks Boost Investor Confidence

The US Dollar Index (DXY) advanced to around 99.25 during early Tuesday trading in the European session, climbing 0.22% for the day. This move reflects growing investor optimism surrounding the ongoing US-China trade negotiations taking place in London.

Following Monday’s initial meeting, both sides resumed discussions on Tuesday, with encouraging signs emerging. US Treasury Secretary Scott Bessent described the talks as a "good meeting," signaling potential progress in resolving long-standing trade tensions.

Tech and Rare Earth Trade Emerge as Key Issues

The Trump administration has reportedly shown readiness to ease restrictions on some tech exports in return for China loosening its grip on rare earth shipments. Rare earth elements are vital for energy, defense, and high-tech industries, and any breakthrough on this front could signal a broader easing of trade frictions.

Upcoming CPI Inflation Data in Focus

While optimism over trade supports the Greenback, market participants now turn their attention to the US May Consumer Price Index (CPI) report, which is scheduled for release on Wednesday. The inflation data will provide further insight into the Federal Reserve's policy trajectory and the overall health of the US economy.

Related Reading: What the CPI Means for Forex Traders
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Conclusion

The bounce in the US Dollar Index above the 99.00 level underscores a renewed risk appetite amid potential US-China trade breakthroughs. Should the CPI numbers align with market expectations, the USD could find further upside momentum in the near term.