US Dollar Forecast: DXY Holds Steady as Treasury Yields Dip Before Fed Minutes

Dollar Holds Gains as Traders Brace for Tariffs and Fed Minutes

The US Dollar Index (DXY) is holding near 97.595, steady after last week’s rebound from the 96.377 low, as traders monitor President Trump’s August 1 tariff deadline against Japan and South Korea while positioning ahead of the Federal Reserve’s meeting minutes due at 18:00 GMT.

Treasury Yields Dip Ahead of Fed Minutes

US Treasury yields turned lower at 15:00 GMT, with the 10-year yield down to 4.377% and the 30-year at 4.906%.

This move reflects caution as traders recalibrate rate cut expectations and inflation risks before the FOMC minutes. Investors are weighing the potential for softer economic growth against sticky price pressures from upcoming tariffs, creating a tense holding pattern across rate and FX desks.

Federal Reserve Watches Tariff Impact on Inflation

Today’s Fed Minutes are expected to show policymakers debating whether tariff-driven price increases will be transitory or require policy action.

The Fed has held its policy rate steady at 4.25%-4.50%, but market participants remain wary of a policy misstep if tariffs lift prices faster than wage growth can adjust.

While Trump has publicly pressured the Fed for cuts, recent employment data strength could limit immediate action unless inflation persists.

OPEC and Copper Tariffs Fuel Inflation Concerns

Traders are also watching copper markets as Trump threatens 25%-50% tariffs on key imports, including semiconductors and pharmaceuticals, while signaling potential 200% levies on selected goods.

OPEC’s supply discipline adds to the inflation watch, with commodity traders positioning for higher local US input costs, which could ripple into CPI data critical for the Fed’s near-term outlook.

DXY Technical Outlook: Resistance at 99.000 in Focus

The DXY daily chart shows the index consolidating near 97.899, with the 50-day simple moving average resistance at 99.000 and the 200-day simple moving average higher at 103.682.

The rebound from the 96.377 low has provided a near-term floor.

A decisive break above 99.000 could open a move toward 100.540, while rejection below 97.899 would refocus trader attention on the 96.377 support if sentiment softens.

Market Forecast

The US Dollar Index maintains a cautiously bullish bias while holding above 96.377 as traders price in supply-driven inflation risks and potential tariff impacts on headline CPI.

Fed caution and lower yields may limit aggressive dollar upside unless inflation data or new tariff headlines drive momentum.

A clean break above 99.000 would strengthen bullish conviction toward 100.540, while a fall back below 97.899 would shift focus toward retesting the 96.377 floor, particularly if negotiations ease tariff risks ahead of the August 1 deadline.

More Information in our Economic Calendar.