US Dollar Index (DXY) dips further and nears 98.00 on risk appetite, lower US yields

• The Dollar extends losses for the second day in a row amid a mild risk appetite..

• A positive ECB finance report and "not too bad" Japanese elections are buoying the Euro and the JPY.

• Increasing concerns about US tariffs keep the US Dollar supported near recent highs.

The US Dollar extends Friday’s reversal on Monday’s European morning session. A moderate risk appetite in the absence of key fundamental releases and the lower US Treasury yields are acting as headwinds for the US Dollar.

In Europe, An ECB Survey on Access to Finance of Enterprises revealed that European firms are optimistic about the economic outlook, although concerned about the potential impact of Trump’s tariffs. The Euro nudged higher following the release of the survey, increasing pressure on the USD.

Somewhat earlier, the Japanese Yen appreciated af ter the Japanese elections left the door open for Prime Minister Ishiba to continue and avoid the feared tax-cutting agenda of the opposition party. Ishiba’s ruling coalition lost the majority in the upper house by only three seats, but the Prime Minister vowed to continue, focusing on the trade negotiations with the US.

Risk appetite, however, remains limited as anxiety about tariffs increases with the August 1 deadline around the corner and the lack of progress in the trade talks. Trump escalated tensions with the EU over the weekend, pushing for 15% to 20% blanket tariffs to the EU, and the bloc is pondering increasing the 10% tariffs on US products even if a deal is reached.