US Dollar Index advances to near 100.00 due to Fed caution, Initial Jobless Claims eyed

• The US Dollar Index may extend its gains as the Federal Reserve maintains a cautious policy stance.
• Fed Chair Jerome Powell cautioned that US trade tariffs could undermine the central bank's inflation and employment targets in 2025.
• US President Donald Trump is expected to unveil a new trade deal on Thursday.

The US Dollar Index (DXY), which measures the US Dollar (USD) against a basket of six major currencies, is extending gains for a second straight session, hovering near 100.00 at the time of writing. The DXY may continue to gain ground amid the Federal Reserve's (Fed) cautious policy stance.

On Wednesday, the Fed kept interest rates unchanged at 4.25%-4.50%, while acknowledging rising risks related to inflation and unemployment, adding fresh uncertainty to the market outlook. Despite the pause, the CME FedWatch Tool shows traders still pricing in a 25-basis-point rate cut in July.

During the post-meeting press conference, Fed Chair Jerome Powell warned that US trade tariffs could hinder the Fed's inflation and employment goals in 2025. He signaled that ongoing policy instability might compel the central bank to take a more cautious, wait-and-see approach to future rate moves.

Meanwhile, "The New York Times", citing three sources, reported that President Donald Trump is expected to announce a new trade deal on Thursday. On Wednesday night, Trump teased the news on social media: "Big News Conference tomorrow at 10:00 A.M., The Oval Office, concerning a MAJOR TRADE DEAL WITH REPRESENTATIVES OF A BIG, AND HIGHLY RESPECTED, COUNTRY. THE FIRST OF MANY!!!"

Separately, US Treasury Secretary Scott Bessent is set to meet China's top economic official on May 10 in Switzerland, aiming to revive stalled trade talks. However, Bessent downplayed expectations, calling the meeting a preliminary step. Trump echoed this stance, claiming China initiated the dialogue and reaffirming his refusal to ease tariffs to lure Beijing to the table.