- The US Dollar Index gains momentum to near 99.25 in Tuesday’s early European session, adding 0.22% on the day.
- Hope for US-China trade talk progress underpins the US Dollar.
- Traders will take more cues from the US May CPI inflation data. Which is due later on Wednesday.
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, rebounds to around 99.25 during the early European session on Tuesday amid improved risk sentiment. Investors will closely monitor the outcome of the United States (US)-China trade talks, which are set to continue in London later on Tuesday.
Trade talks between the US and China began in London on Monday and were set to continue on Tuesday. The Trump administration indicated it would remove restrictions on some tech exports in exchange for assurances that China is easing limits on rare earth shipments, which are critical to a wide array of energy, defense and technology products.
US Treasury Secretary Scott Bessent described Monday’s discussions as a “good meeting.” Optimism over easing US-China trade tensions dampens the concerns over the economic slowdown in the world’s two largest economies, supporting the Greenback.
The US Consumer Price Index (CPI) inflation data for May will take center stage on Wednesday. The report could offer some hints about the tariff impact and interest rate outlook. The headline CPI is expected to see an increase of 2.5% YoY in May, while the core CPI is estimated to see a rise of 2.9% YoY in the same period. If the report shows a surprise softer inflation outcome, this could drag the USD lower broadly.
