US Dollar Index edges higher to near 97.50 ahead of PMI data, Powell’s speech

• US Dollar Index advances amid cautionary remarks from Fed officials.
• US S&P Global Manufacturing and Services PMIs are expected to ease in September.
• Cleveland Fed President Beth Hammack cautioned that inflationary pressures are likely to remain in place for now.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is trimming its recent losses from the previous session and trading around 97.40 during the early European hours on Tuesday. Traders will likely observe the preliminary reading of the US S&P Global Purchasing Managers Index (PMI) data for September later in the day, along with awaiting the US Federal Reserve (Fed) Chair Jerome Powell’s speech.

Traders will shift their focus toward the August Personal Consumption Expenditures (PCE) Price Index data, the Federal Reserve’s preferred inflation gauge, which is expected to signal subdued price pressures.

The Greenback received support from cautious statements given by US Federal Reserve (Fed) officials on Monday. Fed Bank of Cleveland President Beth Hammack warned that inflation pressures will likely persist for the time being, noting challenges on both sides of the Fed's mandate to both control inflation and support the labor market. We should exercise great caution in easing policy restrictions, as we are falling short on inflation by a more significant margin, Hammack added.

Meanwhile, Richmond Fed President Thomas Barkin noted that tariff policies tend to result in higher prices for consumers, noting that the primary point of concern for businesses remains cloudy trade policy, not high interest rates. However, new Governor Stephen Miran cautioned that the Fed is misjudging the degree of policy tightness, risking damage to the labor market without more substantial easing.