US Dollar Index: DXY stays pressured around 103.00 as US debt ceiling talks, Fed Minutes loom

• US Dollar Index keeps Friday’s pullback from two-month high, stays pressured around intraday low of late.
• US policymakers’ inability to offer debt ceiling deal, mixed Fed talks prod DXY bulls as the key week begins.
• US PMIs, Fed’s favorite inflation gauge, FOMC Minutes will decorate calendar, US efforts to avoid default are the key.

US Dollar Index (DXY) holds lower ground near the intraday bottom surrounding 103.00 as it keeps Friday’s pullback from a multi-day high amid downbeat concerns about the US debt ceiling negotiations and the Federal Reserve (Fed) during early Monday. In doing so, the US Dollar’s gauge versus the six major currencies also portrays the market’s preparations for this week’s top-tier data/events.

Among the latest negative for the DXY is the US policymaker’s inability to offer a debt ceiling deal, as well as mixed comments from the Federal Reserve (Fed) officials.

That said, Reuters mentioned that US President Joe Biden and House Republican Speaker Kevin McCarthy will meet to discuss the debt ceiling on Monday, after a "productive" phone call as the president headed back to Washington,” Reuters quotes to sides. It should be noted that Republicans were less optimistic and paused the talks earlier in the weekend.

Elsewhere, Federal Reserve Chairman Jerome Powell highlighted inflation fears on Friday but also stated that the recent banking crisis, which led to tighter credit standards, has eased the pressure to hike interest rates. The same weighed on the hawkish Fed bets and allowed the US Dollar bulls to take a breather.

It should be noted that the market’s bets of a 0.25% Fed rate hike in June have recently increased and the calls for a rate cut in 2023 have gone down due to the last week’s upbeat United States economics and hawkish comments from the Federal Reserve (Fed) officials. The same keeps the DXY buyers hopeful ahead of the key catalysts.

Against this backdrop, Wall Street closed with minor losses and the S&P 500 Futures track the same while US Treasury bond yields grind higher.

Looking forward, the Federal Open Market Committee (FOMC) meeting minutes, preliminary readings of the May month Purchasing Managers Indexes (PMIs) and the Federal Reserve’s favorite inflation gauge, namely the US Core PCE Price Index, will be crucial to watch for the DXY traders. Above all, US debt ceiling announcements are the key to determining near-term US Dollar moves. Should the US policymakers manage to extend the debt ceiling, the US Dollar Index may witness further upside.

Technical analysis

Despite the latest weakness, the US Dollar Index bears need validation from the 100-DMA support, around 102. 85, to retake control.