The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, oscillates in a range around the 100.35 area through the Asian session on Tuesday and remains close to over a one-week low touched the previous day. Moreover, the lack of any buying interest and a bearish fundamental backdrop suggests that the path of least resistance for the index remains to the downside.

Traders increased their bets for further interest rate cuts by the Federal Reserve (Fed) in 2025 following last week's softer-than-expected release of the US Consumer Price Index (CPI) and the Producer Price Index (PPI). Adding to this, the disappointing US monthly Retail Sales data increased the likelihood of several quarters of sluggish growth. This, along with a surprise downgrade of the US government's credit rating on Friday, continues to act as a headwind for the USD.

Meanwhile, the US and China agreed to significantly lower tariffs and initiated a 90-day pause to finalize a broader deal. The development marked the de-escalation of a disruptive standoff between the world's two largest economies and eased concerns about a US recession. This, in turn, is holding back traders from placing aggressive bearish bets around the USD and helping limit the downside on the back of the recent hawkish remarks from several influential FOMC members.

Moving ahead, there isn't any relevant market-moving economic data due for release on Tuesday. Hence, the focus will remain glued to speeches by influential FOMC members, which will play a key role in driving the USD later during the North American session.

Source: Fxstreet