• DXY recovery from 98.26 lows stalls below 98.90, remains 0.6% down on the week,
• Trump's softer tone towards Europe has scaled back the "Sell America" trade.
• US GDP and PCE Price Index figures might set the US Dollar's direction later on Thursday.

The US Dollar Index (DXY) bounced on Tuesday, as US President Donald Trump softened his tone toward the European Union in his speech at the World Economic Forum in Davos. Investor’s relief boosted the US Dollar's recovery from three-week lows to 98.26, though it is lacking follow-through ahead of the 99.00 level.

Trump dropped his threat to impose additional tariffs on European countries disputing his plan to annex Greenland and ruled out military action against a NATO member. Later on Wednesday, he announced the framework of a deal on the Arctic island, though no further details of the agreement have been disclosed.

A somewhat higher appetite for risk has halted the “Sell America” trade, witnessed earlier this week. The US Dollar Index, however, remains 0.65% lower on the week so far, as the focus shifts back to the macroeconomic front from the geopolitical arena.

In that sense, markets will be attentive to the release of the delayed US PCE Price Index figures for October and November, which are expected to confirm that inflationary pressures remain well above the US Federal Reserve’s (Fed) 2% target for price stability.

At the same time, the US Bureau of Economic Analysis (BEA) is expected to release the final reading of the third quarter’s Gross Domestic Product. Previous estimates revealed that the US economy accelerated to a 4.3% annualised growth rate in the quarter, from 3.8% in the previous one.