US Dollar Index holds steady near 98.00 due to market caution

• US Dollar Index moves little as traders adopt caution due to rising tariff concerns and Fed’s independence worries.

• US Commerce Secretary Lutnick stated that August 1 is a firm deadline, but discussions are likely to continue even after.

• Treasury Secretary Bessent urged a reassessment of the Federal Reserve as an institution.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is holding ground after losing more than 0.50% in the previous session and trading at around 97.90 during the Asian hours on Tuesday. Market caution deepened amid rising uncertainty over impending tariffs and increasing worries about the Federal Reserve's (Fed) independence.

US Commerce Secretary Howard Lutnick stated unequivocally in a televised interview, “That’s a hard deadline, so on August 1, the new tariff rates will come in. Nothing stops countries from talking to us after August 1, but they’re going to start paying the tariffs on August 1.”

US Treasury Secretary Scott Bessent said the Fed’s independence on monetary policy is under threat by its "mandate creep" into non-policy areas. Bessent urged the central bank to undertake a comprehensive review of those activities.

Treasury Secretary Bessent also called for a reassessment of the Federal Reserve as an institution. President Trump’s renewed criticism of Chair Powell for not lowering interest rates has intensified speculation about a possible dismissal.

A White House official said that US President Donald Trump is likely to fire Fed Chairman Jerome Powell soon. However, Trump denied it in a Truth Social post on Sunday, calling it “typically untruthful.”

Republican Congresswoman Anna Paulina Luna has formally accused the Fed Chair Powell of committing perjury on two separate occasions, both related to discussions about the Federal Reserve's long-planned renovations of its headquarters in Washington, D.C.