After a torrid few days, the dollar managed to find a little support yesterday. The domestic data was mildly encouraging in that weekly jobless claims fell again, the service sector pushed the US composite PMI to the highest levels since last December, and June new home sales were not too weak. At the same time, US equity markets continue to nudge to new highs on healthy second-quarter earnings releases and the view that the Federal Reserve will be cutting rates later this year, ING's FX analyst Chris Turner notes.

USD can find a little stability this summer

"On the subject of equities, buy-side surveys suggest that investor cash levels are relatively low and that the community may be close to being fully invested. While a catalyst for an equity correction is not obvious (tariff deadlines in August spark new threats?), it looks like traders will still have to be nimble this summer."

"There is not a lot on the US calendar today, but next week is a jam-packed one in the form of the FOMC meeting, June PCE inflation data, tariff deadlines and the July payrolls. We're still of the opinion that the dollar can find a little stability this summer on higher inflation and delayed Fed rate cuts – but clearly this view stands against pervasive dollar pessimism in the market."

"DXY could trade a 97.00-97.70 range, but with risks to the downside if a strong German Ifo takes EUR/USD much higher in the European morning."