US Dollar Index Steadies Near 98.00 After Paring Earlier Losses

The US Dollar Index (DXY), which tracks the performance of the US Dollar against a basket of six major currencies, traded close to the 98.00 mark on Wednesday after recovering from earlier daily losses. During European trading hours, the index hovered around 97.90, showing muted price action as markets operated in a holiday-shortened session with reduced trading volumes.

Rate Cut Expectations Weigh on the Dollar

Despite the modest stabilization, the Greenback remains under pressure due to growing expectations that the Federal Reserve could deliver two interest rate cuts in 2026. These expectations have limited upside momentum for the US Dollar Index, even as recent economic indicators continue to point to solid underlying growth. Traders remain cautious, balancing current data strength against a more accommodative policy outlook over the medium term.

Treasury Yields Offer Temporary Support

US Treasury yields rebounded during the session, providing short-term support to the dollar. The 2-year Treasury yield rose to around 3.53%, while the 10-year yield climbed to approximately 4.16%. However, market participants note that yields could retreat if confidence in future Federal Reserve easing strengthens, particularly as investors reassess the sustainability of restrictive monetary policy.

Economic Data and Policy Commentary in Focus

Recent US economic data showed stronger-than-expected momentum in the third quarter. Preliminary figures revealed that annualized GDP expanded by 4.3%, beating forecasts of 3.3% and improving on the previous quarter’s 3.8% growth. Meanwhile, the core Personal Consumption Expenditures (PCE) Price Index increased by 2.9% quarter-over-quarter, in line with expectations.

Adding to the debate, White House economic adviser Kevin Hassett commented that the Federal Reserve is cutting interest rates too slowly, despite robust economic growth. Separately, Federal Reserve Governor Stephen Miran warned that delaying policy easing could raise recession risks, reinforcing market speculation around future rate cuts.

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