US Dollar Index (DXY) extends gains to 98.85 as market mood improves

• The US Dollar Index appreciates to 98.85 highs as trade war fears wane.
• Trump said that he expects to reach a "fair deal" at his meeting with Xi Jinping next week.
• The White House's economic advisor, Kevin Hassett affirmed that the US Shutdown will likely end this week.

The US Dollar strengthened across the board for the third consecutive day on Tuesday. The pair is trading near 98.75 at the early European session, at a short distance from the 98.85 intraday highs, and well above the 98.00 lows hit last Friday.

The USD Index, which measures the value of the USD against a basket of six majors, is drawing support from the risk-on market mood triggered by US President Donald Trump's optimism about a trade deal with China that would avoid higher tariffs.

Trump calmed markets on Monday, announcing that he will meet the Chinese Prime Minister Xi Jinping in South Korea next week and that he is expecting to reach a "fair deal" that would lead to a "very good relationship" between the world's two major economies.

Meanwhile, the director of the US National Economic Council affirmed that the US federal government shutdown is likely to end this week in a CNBC interview, which contributed to easing risk aversion and provided a fresh impulse to the US Dollar.

The US government shutdown entered its fourth week and has caused a blackout on most US macroeconomic releases, including key US employment and inflation data, and might deprive the Federal Reserve of key input to decide on monetary policy at next week's monetary policy meeting.