US Dollar Index Slips Toward 98.00 as Risk Appetite Grows and Yields Soften

US Dollar Index Nears 98.00 on Global Stability and Tariff Anxiety

Greenback Weakens Amid Softer Yields and Benign Risk Sentiment

The US Dollar Index (DXY) continued its two-day decline, dropping to around 98.00 in early Monday European trading. Despite lingering trade tension, improving risk appetite and lower US Treasury yields are dragging on the Dollar's strength.

Global Factors Favor Rivals of the Dollar

Two key developments are boosting competing currencies:

• A positive ECB Survey on Access to Finance showed improved business sentiment in Europe, lifting the Euro and adding pressure on the USD.
• Japanese Yen appreciated after the weekend's upper house election results, where Prime Minister Ishiba's coalition retained a near-majority. This outcome supports continued leadership and likely policy continuity—critical for ongoing US-Japan trade negotiations.

Tariff Tensions Still Loom Large

Despite risk-on sentiment in some areas, investors remain cautious. With the August 1 tariff deadline fast approaching, President Trump’s call for 15%–20% tariffs on EU goods raises fears of an escalating trade war. In retaliation, the EU is considering raising its existing 10% tariffs on US imports—even if a deal is signed.

Treasury Yields Add Pressure

Meanwhile, softer US Treasury yields are compounding USD losses, especially with no major US economic releases to offer fresh support. The lack of bullish momentum and rising global optimism leave the Dollar vulnerable in the short term.

Key Takeaways for Traders

• Support level: 98.00
• Resistance: 98.75
• Bias: Mildly bearish
• Watchlist: Tariff headlines, US bond market, ECB commentary

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• Yen Strengthens After Japanese Election Outcome
• How US Tariff Policies Are Shaping FX Markets