US Dollar Index recovers some lost ground above 98.00 despite ongoing US government shutdown

• US Dollar Index rebounds to near 98.05 on Monday's Asian session.
• Concerns over the ongoing US government shutdown weigh on the DXY. 
• Fed's Miran stated the central bank has room for more cuts. 

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 positive note around 98.05 during the Asian session on Monday. The potential upside for the DXY might be limited due to uncertainty and expectations of future interest rate cuts by the US Federal Reserve (Fed). 

Uncertainty surrounding a US government shutdown undermines the DXY against its rivals. The US government shutdown entered its fifth day as US Senators failed to pass spending proposals to reopen the federal government. Later on Sunday, US President Donald Trump said that his administration would begin laying off federal workers.  The US September employment report was due for release on Friday, but was not published due to the government shutdown.

Growing expectations of additional Fed rate cuts also drag the US Dollar lower. Traders are currently priced in an additional 25 basis points (bps) cuts in both October and December, with a chance of 95% and 83%, respectively, according to the CME FedWatch tool.

Fed Governor Stephen Miran said on Friday that he supported an aggressive path of rate cuts, citing the impact of the US President Donald Trump administration policies on the economy. Meanwhile, Dallas Fed President Lorie Logan remained hawkish, saying that the central bank really needs to be cautious of further rate cuts in an environment where things like non-housing services inflation remain "worrisome."

The minutes from the Federal Open Market Committee's (FOMC) September monetary policy meeting will be closely watched later on Wednesday. Any cautious tone from Fed officials could lift the USD in the near term.