The US dollar rose in European trade on Tuesday against a basket of major rivals, resuming the gains and on track for multi-week highs as concerns about a US recession receded, with increasing signals of impending trade deals between the US and its partners.

Now investors await a batch of important US data, which would provide important clues on the odds of a Fed interest rate cut in the first half of the year.

The Index

The dollar index rose 0.4% today to 99.35, with a session-low at 98.94.

On Monday, the index lost 0.65% on profit-taking away from a week high at 99.94.

Trade Developments

US Treasury Secretary Scott Bessent stated on Monday that several trade partners provided very good proposals for trade deals to avoid tariffs, starting with India.

He said that recent steps by China to exempt some US goods from tariffs shows readiness to calm trading tensions.

The US administration is also expected to move on Tuesday to limit the scope of auto tariffs and parts to reduce the pressure on automakers.

US Rates

Several Fed officials recently signalled theres no need to cut interest rates soon as the Fed continues to analyze new data to gauge the impact of US tariffs on the economy.

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut stand at only 9%, while the odds of such a cut in June stand at 63%.

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