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  • DXY recedes from tops beyond the 99.00 mark.
  • Trump said a trade deal could come earlier than expected.
  • US Q2 GDP, Trade Balance figures, Fedspeak next of relevance.

The US Dollar Index (DXY), which tracks the Greenback vs. a bundle of its main rivals, has come under renewed selling pressure after hitting fresh weekly tops beyond 99.00 the figure.

US Dollar Index focused on data, trade, Fedspeak

The index managed to regain the 99.00 mark and above on Wednesday, challenging at the same time 3-week highs on the back of a moderate improvement in the sentiment for the buck.

Comments by President Trump that a US-China trade agreement could be closer than expected have bettered the mood in the risk-associated space, lifted US yields and removed some tailwinds from the Greenback’s upside.

Busy day in the US docket, as the final Q2 GDP results are due along with inflation figures tracked by the PCE, usual Initial Claims, advanced Trade Balance readings and Pending Home Sales.

In addition, Atlanta Fed R.Kaplan (2020 voter, dovish) will give opening remarks at a Dallas Fed Conference, St.Louis Fed J.Bullard (voter, dovish) will speak at the Minorities Banking Forum, FOMC’s R.Clarida (permanent voter, dovish) and San Francisco Fed M.Daly (2021 voter, centrist) will participate in a Fed Listens event, Minneapolis Fed N.Kashkari (2020 voter, dovish) will speak in Montana and Richmond Fed T.Barkin will speak at a Financial Markets Event in Richmond.

What to look for around USD

Market participants have already digested the recent FOMC event and appear to have shifted their focus to the US-China trade war once again. Domestic data in combination with politics and trade developments should be key in determining the next decision on rates after Fed’s Powell left the door open for extra easing along the road. However, the increasing dissent among FOMC members casts further clouds on the probability of extra stimulus at the upcoming meetings, leaving the outlook on interest rates quite mixed, to say the least. Looking at the broader picture, the positive view on the Dollar is still well underpinned by the solid US labour market, strong consumer confidence and spending and the auspicious pick up in consumer prices, all adding to the safe haven appeal and the status of ‘global reserve currency’.  

US Dollar Index relevant levels

At the moment, the pair is losing 0.11% at 98.90 a break above 99.10 (high Sep.12) would aim for 99.37 (2019 high Sep.3) and then 99.89 (monthly high May 11 2017). On the downside, the immediate support lines up at 97.86 (monthly low Sep.13) followed by 97.65 (100-day SMA) and finally 97.17 (low Aug.23).