XPS 15 9560, U2518D, max resolution?

For QHD resolution, you can use either the HDMI output or a USB-C to DisplayPort or HDMI cable, whichever is most convenient to you.  If you use a USB-C dock, you'll still be able to run one display of that resolution.  If you use a TB3 dock, you could run up to 3 of them.  But the HDR portion adds a twist.  Formal HDR support wasn't added until HDMI 2.0 and DisplayPort 1.4, neither of which your system has, and according to the U2518 manual, it has HDMI 2.0 but only DisplayPort 1.2, so it appears that HDR would only work if you use HDMI 2.0.  DisplayPort 1.2 (which is what your USB-C output would provide) has enough bandwidth for at least one QHD display at 10-bit color rather than the typical 8-bit, but I don't know if that's true of the system's HDMI output - but again, bandwidth isn't the only requirement here.  That said, HDR displays on PCs and even the HDR experience on PCs still aren't really ready for primetime, for a few reasons:

- PC displays still don't get bright enough to deliver a good experience (even most allegedly HDR TVs don't unless you spend real money for the high-end ones)

- There's very little HDR content available for PC viewing.  There's Ultra HD Blu-ray, but the technical requirements around getting that working on PCs are still pretty daunting and have a lot of potential pitfalls.  Otherwise, it's pretty much just YouTube HDR, some Netflix, and a small handful of games, but if you want to game in HDR, there are much better gaming display options.

- You still have to switch to HDR mode within Windows manually every time you want to use HDR content.  The reason is that whenever that mode is on, any content that isn't HDR will look wrong, so that becomes a bit of a pain.

Lastly, if you want QHD resolution, I would also very strongly recommend that you consider a 27" display instead, mainly because a 27" display physically isn't much larger in terms of desk requirements (~1" taller and ~1.75" wider), but it will probably be enough to make the pixel density more usable to you at regular 100% scaling rather than having to select some other value.  Although Windows and applications have been getting better about this, they still don't always work ideally when display scaling is enabled, so if you can avoid it, you should.  For reference, Windows 100% scaling is designed to assume a 96 ppi display.  Even a 27" QHD display is already above that at 109 ppi.  A 25" QHD display is 118 ppi.

I just bought two U2717D displays and love them.  I'm driving both of them from a single USB-C port by using DisplayPort daisy-chaining.  I have a USB-C to DisplayPort cable going the first display, and then I used the included DisplayPort to Mini-DisplayPort cable to connect the first display's DisplayPort output to the second one's Mini-DisplayPort input.  (Then you need to enable DP 1.2 / MST mode in the display's settings interface.)  The U2717D admittedly doesn't support HDR, but if you can give that up and find a tiny bit more desk space, I think you'll like it.