US Dollar Index steadies near 97.50, faces pressure on Fed rate cut bets

• US Dollar Index may lose ground amid rising odds of multiple Fed rate cuts this year.
• Traders expect the US Federal Reserve will cut rates by 25 basis points on Thursday.
• Trump's economic adviser Stephen Miran is expected to be sworn in as a Fed governor ahead of the policy meeting.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is remaining steady and trading around 97.60 during the Asian hours on Monday. The Greenback may come under pressure as a softening labor market raises the chances of the Federal Reserve delivering its first rate cut of the year on Thursday.

Traders anticipate the US Federal Reserve (Fed) will cut rates by 25 basis points at its September meeting, with a slim possibility of a 50-basis-point move. Markets have also priced in continued easing through 2026 to guard against a potential recession.

Expectations for multiple Fed cuts strengthened after US weekly initial jobless claims rose to their highest level since October 2021, following a weak nonfarm payrolls report, which overshadowed a hotter-than-expected consumer inflation reading.

Reuters reported that Morgan Stanley and Deutsche Bank now expect the Federal Reserve to deliver three rate cuts this year, after recent data pointed to easing inflation pressures. In separate notes on Friday, the brokerages projected 25-basis-point reductions at each of the Fed's remaining meetings in September, October, and December.

Traders are also keeping their eyes on whether President Donald Trump's economic adviser Stephen Miran will be sworn in as a Fed governor before the policy meeting. According to Reuters, citing the Senate schedule set by Republican leaders, the full Senate vote on his confirmation is scheduled for Monday evening.