US Dollar Index Holds Above 98.00 as Markets Eye CPI and Geopolitical Risks

US Dollar Index Holds Above 98.00 as Markets Eye CPI and Geopolitical Risks

The US Dollar Index (DXY) remains steady near 98.10 during the early Asian session on Tuesday, after gaining for four straight sessions. Despite showing signs of fatigue, the US Dollar (USD) continues to benefit from safe-haven flows fueled by rising geopolitical tensions and investor anticipation of fresh US CPI inflation data.

Trump Threatens Harsh Tariffs on Russia and Energy Importers

US President Donald Trump warned Monday of “very severe” tariffs against Russia if a peace agreement in Ukraine is not reached within 50 days. The proposed measures include secondary tariffs on countries importing Russian oil, further escalating global uncertainty.

In a joint appearance with NATO Secretary-General Mark Rutte, Trump confirmed that European allies had agreed to purchase billions of dollars worth of US-made weapons—notably Patriot missile defense systems—to support Ukraine’s defense. The enhanced military cooperation adds to the overall geopolitical pressure driving demand for the USD.

All Eyes on June CPI Inflation Release

The market’s focus is now turning to Tuesday's release of US Consumer Price Index (CPI) data for June. The reading is expected to shape expectations around the Federal Reserve’s monetary policy outlook for the remainder of 2025.

If inflation comes in hotter than expected, the Fed could maintain a cautious stance, potentially delaying rate cuts and supporting the Greenback. On the other hand, a softer CPI could pressure the Dollar and shift focus to potential monetary easing later in the year.

Outlook

With geopolitical tensions rising and inflation risks still looming, the DXY is likely to stay supported near current levels. However, any surprises in today’s CPI data could trigger sharp movements in the currency markets.

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