US Dollar Struggles at Key Threshold Amid Trade Policy Uncertainty

The US Dollar Index (DXY) has been struggling to regain the 100 level, with four failed attempts to reclaim this psychological threshold. According to DBS Group Research strategist Philip Wee, the DXY's negative bias is becoming increasingly difficult to ignore.

Wee notes that when the Japanese Yen's volatility is excluded, European currencies are better representing the underlying dollar weakness. The EUR (+0.19%), GBP (+0.14%), and CHF (+0.14%) have shown strength in recent days.

The futures markets have also reduced expectations for a September Federal Reserve rate hike to 58% from 72%, following last week's underwhelming FOMC meeting.