US Dollar Index holds steady above 97.00 ahead of Fed's Powell speech

• US Dollar Index flat lines around 97.30 in Tuesday's Asian session. 
• Traders have reined in bets of Fed rate cuts in the October meeting. 
• Fedspeak and the advanced US S&P Global PMI reports will be the highlights later on Tuesday. 

The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, trades on a stronger note near 97.30 during the Asian trading hours on Tuesday. The DXY trades on a flat note as traders await remarks by the Federal Reserve policymakers for more clues on the path of interest rates.  

Traders reduce their bets that the US Federal Reserve (Fed) will cut its key interest rate in the October meeting after several Fed officials suggested a more cautious approach to the easing cycle and emphasized that there remain upside inflation risks. Financial markets are now pricing in nearly a 10.2% odds of a hold, compared to a chance of 8.1% on Friday, according to the CME FedWatch tool. 

However, the Fed's updated projections, the so-called "dot plot," indicate that two more quarter-points are likely before the year-end, and Fed Chair Jerome Powell highlighted that the path forward is not pre-set and will depend on incoming economic data. Traders will also monitor the speech from Powell for some hints about the US interest rate outlook. 

On Monday, St. Louis Fed President Alberto Musalem stated that he supported the rate cut at last week's Fed meeting as a precautionary move to protect the job market but said there may be "limited room" for further reductions as inflation remains above the target. Meanwhile, Fed Governor Stephen Miran, who voted against the quarter-percentage-point reduction in favor of a steeper 50 bps rate cut last week, said on Monday that the central bank should cut interest rates aggressively to reduce risks to the economy's outlook.

The preliminary reading of the US S&P Global Purchasing Managers Index (PMI) reports for September will be published later on Tuesday. If the reports show a weaker-than-expected outcome, this could undermine the US Dollar against its rivals.