The US Dollar Index remains volatile, with the 10% tariff set to remain in place despite the trade deal with the UK.

• The US Dollar Index flattens ahead of the US trading session as enthusiasm over the US-UK trade deal wanes.
• CNN reports that the 10% tariffs will remain on the UK despite the brokered agreement with the US.
• The US Dollar Index encounters resistance and settles below the 100.00 level as the US trading session begins on Thursday.

The US Dollar Index (DXY), which measures the performance of the US Dollar (USD) against six major currencies, is currently trading flat and has dipped back below the 100.00 mark ahead of an anticipated announcement from Donald Trump regarding a “major trade deal” between the United States (US) and the United Kingdom (UK). However, the initial optimism has quickly faded after CNN reported that the 10% tariff on the UK would remain in place, despite Trump’s earlier statements that the trade deal between the two countries was comprehensive.

The US Dollar surged late on Wednesday, driven by the Federal Reserve’s rate decision and remarks from Chairman Jerome Powell. The Fed maintained its policy rate within the 4.25%-4.50% range, as expected, and Powell signaled a cautious approach to rate cuts due to prevailing uncertainty and inflation risks. This indicates that the Fed is unlikely to cut rates anytime soon, which strengthens the US Dollar by maintaining a wider yield differential between the US and other nations, with the US Dollar benefiting from its higher yields.

The US 10-year yields are hovering around 4.29%, showing little movement following the Fed’s decision and the trade deal announcements.