US Dollar Index Rebounds Toward 99.50 After Hitting Five-Week Low

US Dollar Index Rebounds Toward 99.50 After Five-Week Low

The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against a basket of six major currencies, has rebounded from a five-week low of 98.70 reached in the previous session. As of Tuesday’s European trading session, the DXY is trading around 99.30, signaling a tentative recovery.

This rebound comes amid falling US Treasury yields, with the 10-year and 30-year yields declining to 4.46% and 4.97%, respectively. Lower yields tend to weigh on the USD; however, in this case, the decline has coincided with a strengthening greenback as market sentiment shifts.

Adding to the optimism, President Donald Trump's “One Big Beautiful Bill” is progressing to the Senate floor for voting, which is being closely watched by investors for its potential impact on the US economy.

Nevertheless, the broader outlook for the US Dollar remains cautious. The currency has been under pressure following Moody’s historic downgrade of the US credit rating from Aaa to Aa1—the first downgrade since 1917. This action was driven by concerns over rising debt levels and ongoing political gridlock in Washington over budget management. Similar downgrades by Fitch and Standard & Poor’s in recent years have compounded these concerns.

Investors will continue to monitor Treasury yields, fiscal developments, and geopolitical risks as key factors influencing the US Dollar’s direction in the near term.