US Dollar Index Hits One-Month Low Below 99.00 as Risk Appetite Improves

US Dollar Index Reaches One-Month Low Below 99.00 as Risk Appetite Picks Up

The US Dollar Index (DXY) continued its downward trajectory on Monday, falling to a one-month low of 98.70 during the Asian trading session. This decline follows last week’s weakness and reflects a shift in investor sentiment as market risk appetite improves.

The softening of the Dollar comes after US President Donald Trump reversed his earlier threat to impose 50% tariffs on European Union (EU) imports. In a phone call with European Commission President Ursula von der Leyen, both leaders agreed to delay the tariffs until further negotiations could take place. This move has eased trade tension fears and encouraged buying in risk-sensitive currencies like the Euro, while putting pressure on the US Dollar.

The DXY, which tracks the Dollar’s performance against a basket of six major currencies, is now edging closer to its multi-year low of 97.95, last seen in late April.

Looking ahead, market participants are eyeing key economic releases this week, particularly the Minutes of the most recent Federal Reserve (Fed) meeting and the Personal Consumption Expenditures (PCE) Price Index — the Fed's preferred inflation gauge. These events are likely to provide further insight into the Fed's rate path and influence the Dollar's direction in the coming days.