The US Dollar Index treads water below 98.00

• The Greenback navigates a vacillating range near two-day lows.
• US Treasury yields extend their decline across the curve.
• US Treasury Sec. Bessent sees no need for Powell to step down now.

The Greenback, when tracked by the US Dollar Index (DXY), alternates gains with losses in the lower end of the weekly range below the 98.00 support amid another day of generalised weakness in US yields.

Focus stays on Trump-Powell, trade

Indeed, the US Dollar trades without clear direction on turnaround Tuesday amid a broad-based calm front in the FX galaxy as investors wait for any indications of movement in discussions before the August 1 deadline, which may mean high tariffs for US trade partners who fail to reach deals.

The trade issue remains challenging, as reaching an agreement between the US and the European Union (EU) is difficult, and the EU may face 30% tariffs starting August 1. It is worth recalling that EU officials indicated on Monday they were looking into a wider range of potential countermeasures since the chances of an accord were becoming worse.

Returning to the topic of Trump and Powell, US Treasury Secretary Scott Bessent previously argued that Chief Jerome Powell does not need to leave his position at this time, adding that Powell's legacy should focus on addressing the central bank's non-monetary policy tasks.

What's next?

On the US docket, the Richmond Fed Manufacturing Index is due later, prior to the API's weekly report on US crude oil stockpiles.

What about techs?

Once the multi-year low at 96.37 (July 1) is cleared, DXY might attempt a move to the February 2022 base at 95.13 (February 4), prior to the 2022 base of 94.62 (January 14). On the flip side, the first resistance emerges at the June top of 99.42 (June 23), which appears propped up by the proximity of the provisional 55-day SMA. The weekly top of 100.54 (May 29) comes next, ahead of the May high of 101.97 (May 12). In the meantime, the index appears prepared to continue its negative trend as long as it stays below the 200-day SMA at 103.49. In addition, momentum indicators continue to show a negative bias. The Relative Strength Index (RSI) hovers around the 47 level, while the Average Directional Index (ADX) near 11 indicates a lack of trend strength.