Dollar Drop Presses Pauses

The protracted downturn in the dollar paused Tuesday, with the USD index
stabilising slightly after touching new multi-month lows in Asia-Pac hours.

It remains far too soon to call an end to the USD rout, with the Fed
decision likely playing a key part going forward.

GBP was the strongest currency in G10, with markets watching the continued
disruption to international travel in the Eurozone as a result of renewed
growth in COVID cases in parts of Spain. GBP/USD rallied to touch $1.2950
and the best levels since mid-March. Similarly, EUR/GBP edged lower,
but remains above key support at the 0.9007 50-dma.

The FOMC decision takes focus Wednesday. While the Fed is ultimately likely to
adopt outcome-based forward guidance tied to inflation, more discussion rather
than action looks likely this month.

Australian inflation data for Q2, US trade balance & pending home sales
numbers are also due. Lastly, earnings from Qualcomm, PayPal,
General Electric & General Motors are on the docket.