The US Dollar Index edged lower toward 97.00 amid Fed uncertainty and US shutdown concerns

The US Dollar Index stays under pressure near 97.00 in Tuesday’s Asian session as concerns over Fed independence grow ahead of expectations that rates will remain unchanged at Wednesday’s meeting.

The US Dollar Index (DXY) weakened toward 97.00 in Asian trading on Tuesday, with investors awaiting the US ADP Employment Change and Consumer Confidence data later in the day.

Concerns over the Federal Reserve’s independence have pushed the DXY to its lowest level since September 18, 2025, after President Donald Trump said he would soon name a successor to Fed Chair Jerome when his term ends in May. According to Reuters, betting markets see BlackRock executive Rick Rieder as the leading candidate.

Tim Duy, chief US economist at SGH Macro Advisors, noted that the actions of the next Fed chair cannot be separated from broader economic conditions or their influence on other FOMC members.

Adding to the USD’s downside risks are fears of a US government shutdown, with Senate Democratic leader Chuck Schumer pledging to block a funding bill that includes Homeland Security appropriations. Lawmakers face a January 30 deadline to avoid a partial shutdown.

Meanwhile, the Fed is widely expected to keep rates unchanged at Wednesday’s meeting after three straight cuts late in 2025. Markets will focus on the press conference for signals on the economic outlook and future rate path, with any hawkish tone potentially limiting near-term USD losses.

Sources: Fxstreet