US Dollar Index hovers near 97.50 as traders await US-China trade developments

• The US Dollar Index moves little as traders adopt caution ahead of the US-China trade meeting.
• The US and EU have agreed to impose a 15% tariff on EU exports to the United States.
• The Fed is widely expected to keep the benchmark interest rate steady between 4.25% and 4.50% in July.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is holding ground for the third successive session and trading around 97.60 during the Asian hours on Monday. The Greenback gains ground as traders adopt caution ahead of a meeting between US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng due later in the day in Stockholm.

Traders look for fresh developments on the US-China trade talks. US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are scheduled to meet later in the day in Stockholm. The two countries are expected to extend their tariff truce by another three months, according to a source cited by the South China Morning Post (SCMP) on Sunday. The US has reportedly frozen export controls on key technologies to China to maintain smoother trade relations, according to a source cited by the Financial Times.

However, the US Dollar faced challenges as the market sentiment improved following the trade deal between the United States (US) and the European Union (EU). The US and EU reached a framework trade agreement on Sunday that sets 15% tariffs on most European goods, taking effect on August 1. This deal has ended a months-long standoff, according to Bloomberg.

The US Federal Reserve (Fed) is widely expected to keep the benchmark interest rate steady between 4.25% and 4.50% at its July meeting. The FOMC press conference will be observed for any signs that rate cuts may start in September. Markets have priced in nearly a 62% odds of a rate cut in September, according to the CME Group's FedWatch tool.