US Dollar Index steadies above 97.50 as Fed rate cut bets weigh on outlook

• The US Dollar Index may struggle due to the rising likelihood of a Fed rate cut in September.
• San Francisco Fed President Mary Daly said that officials are ready to lower interest rates soon.
• US inflation increased in July, a rise partly attributed to President Trump's tariffs.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is holding ground after registering losses in the previous four successive sessions and trading around 97.70 during the Asian hours on Monday. United States (US) markets will be closed on Monday for the Labor Day holiday.

The Greenback faces challenges amid rising bets of an interest rate cut by the US Federal Reserve (Fed) in the September meeting. San Francisco Fed President Mary Daly said on Sunday that policymakers will be ready to cut the interest rates soon, adding that inflation stemming from tariffs will likely prove temporary, per Bloomberg.

US Personal Consumption Expenditures (PCE) Price Index remained steady at 2.6% year-over-year in July, coming in line with the market expectation. The US core PCE Price Index, which excludes volatile food and energy prices, rose 2.9% YoY in July, as expected, following June's increase of 2.8%. On a monthly basis, the core PCE Price Index rose 0.2% and 0.3%, respectively.

CNN reported on Friday that the US Court of Appeals for the Federal Circuit upheld a ruling that the sweeping tariffs the US President Donald Trump unilaterally imposed on most other countries were illegal. However, US Trade Representative Jamieson Greer said in a Fox News interview on Sunday that US President Donald Trump's administration will likely continue negotiations with its trade partners despite the US court ruling.