The US Dollar Index regained some lost ground, climbing above 98.00, despite the ongoing US government shutdown.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against a basket of six major global currencies, traded higher around 98.20 during Monday’s North American session. However, upside potential may be limited amid ongoing uncertainty and expectations of future interest rate cuts by the US Federal Reserve (Fed).

Concerns over the US government shutdown continue to weigh on the DXY. The shutdown entered its fifth day as US Senators failed to approve spending proposals to reopen the federal government. On Sunday, President Donald Trump announced plans to begin laying off federal workers. The release of the US September employment report, originally scheduled for Friday, was delayed due to the shutdown.

Meanwhile, growing expectations of further Fed rate cuts are pressuring the US Dollar. Markets are currently pricing in a 25 basis point cut in both October and December, with probabilities of 95% and 83%, respectively, according to the CME FedWatch tool.

Fed Governor Stephen Miran recently supported an aggressive rate-cut strategy, citing economic pressures from the Trump administration’s policies. In contrast, Dallas Fed President Lorie Logan maintained a hawkish stance, emphasizing caution on further cuts due to persistently high non-housing services inflation.

All eyes will be on the minutes of the Federal Open Market Committee’s (FOMC) September meeting, set for release on Wednesday. Any cautious tone from Fed officials could provide near-term support for the US Dollar.