US Dollar Index Nears Three-Year Low at 97.00 Ahead of US PCE Data

US Dollar Index Nears Three-Year Low at 97.00 Ahead of US PCE Data

The US Dollar Index (DXY) continues its downward trajectory on Friday, trading around 97.30, just above the key psychological support at 97.00—a level last seen in March 2022. Traders are cautious ahead of the release of the US May Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation gauge, due later today in the North American session.

DXY Snapshot:

• Current Price: 97.30
• Lowest Since: March 2022
• Outlook: Bearish with Fed and geopolitical overhang

Geopolitical Tensions Add Pressure

Tensions between Tehran and Washington resurfaced after Iranian Foreign Minister Abbas Araghchi categorically ruled out any return to nuclear negotiations. “No deal or agreement has been reached on the revival of negotiations,” Araghchi told CNN, adding that no discussions have been held on the issue.

Fed Autonomy in Question

Market sentiment is also rattled by fresh concerns over the independence of the Federal Reserve. During the NATO summit in The Hague, President Donald Trump openly criticized Fed Chair Jerome Powell, calling him “terrible.” Trump hinted that he has a shortlist of three to four candidates to replace Powell when his term ends, possibly naming a successor by September or October.

Such comments have reignited investor worries over central bank credibility, a crucial factor in supporting the long-term strength of the USD.

What to Watch Next:

• US May PCE Inflation Report
• Fed commentary and Powell responses
• Geopolitical updates from Iran and the Middle East

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