US Dollar Index Steadies Near 98.00 Ahead of FOMC Meeting Minutes Release

The US Dollar Index (DXY) shows little movement as traders adopt a cautious stance ahead of the release of the FOMC December Meeting Minutes.
Market participants are weighing the possibility of two additional Federal Reserve rate cuts in 2026, which could weigh on the Greenback’s strength.
Meanwhile, risk sentiment is improving amid ongoing uncertainties related to the Ukraine–Russia conflict and rising tensions in the Middle East, adding complexity to market dynamics.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, remains steady, trading around 98.00 during Asian hours on Tuesday. Market participants are closely watching the Federal Open Market Committee (FOMC) December Meeting Minutes, expected later in the day, for clues on the Fed’s outlook for 2026.

The Greenback faces potential headwinds amid expectations of two additional rate cuts by the Federal Reserve in 2026. According to the CME FedWatch tool, the probability of the Fed holding rates steady at its January meeting has increased to 83.9%, up from 80.1% a week ago. Meanwhile, the chance of a 25-basis-point rate cut has declined to 16.1% from 19.9%.

The US Federal Reserve lowered interest rates by 25 basis points at its December meeting, bringing the target range to 3.50%–3.75%. This marks a total of 75 basis points cut in 2025, reflecting a cooling labor market alongside persistently elevated inflation.

Risk sentiment has soured amid ongoing geopolitical tensions. Uncertainty has intensified over efforts to resolve the war in Ukraine, after Russia’s foreign minister indicated Moscow’s negotiating stance may harden following alleged strikes near President Putin’s residence.

In the Middle East, escalating conflicts—including Saudi air strikes in Yemen and Iran’s declaration of a “full-scale war” against the US, Europe, and Israel—have stoked fears of wider instability. Former President Trump has warned of further military strikes should Iran resume its nuclear program.

Sources: Fxstreet