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  • Markit’s advance PMI figures show small changes from June to July.
  • Richmond Fed Manufacturing Index comes in slightly above market expectations.
  • New home sales will be released on Wednesday.

The US Dollar Index, which tracks the greenback against a basket of six major currencies, built on the bullish momentum that it gathered on Monday advanced to a daily high at 94.85 during the early European trading hours. However, the index reversed its course in the second half of the day and dropped to 94.40 before making a recovery in the late NA session. As of writing, the pair was virtually unchanged on the day at 94.62, reflecting the market’s indecisiveness ahead of Friday’s critical GDP figures.

The report released by Markit on Tuesday showed that the preliminary manufacturing PMI improved slightly to 55.5 from 55.4 to surpass the market expectation of 55.4. On the other hand, the service sector PMI eased to 56.2 from 56.5 and the composite PMI dropped to 55.9 from 56.2, both figures falling short of market expectations. The Federal Reserve Bank of Richmond’s Manufacturing survey showed that the activity remained healthy in the area with the index staying unchanged at 20.

The only data from the U.S. featured in tomorrow’s macroeconomic calendar will be the new home sales, which is expected to show a 2.8% contraction in June following May’s 6.7% growth. Ahead of Friday’s GDP data, the market reaction is likely to stay limited.

In a recently published report, Commerzbank analysts said that they were expecting the Q2 GDP growth to come in at 4.3 and added: “Growth should slow in the coming quarters though, not least because tighter monetary policy and the trade conflicts are likely to increasingly dampen the US economy.”

Technical outlook

The initial support for the index aligns at 94.30 (50-DMA) ahead of 93.70 (Jul. 9 low) and 93.20 (Jun. 14 low). On the upside, resistances could be seen at 94.70 (20-DMA), 95 (psychological level) and 95.65 (Jul. 19 high).