The US Dollar Index (DXY), which gauges the Greenback vs. a bundle of its main competitors, is extending its recovery to fresh 4-day highs near 97.80. The index keeps pushing higher in the first half of the week and is extending the bounce off last week’s lows in the proximity of the key support at 97.00 the figure, always sustained by the better tone in the risk-associated complex in response to hopes of a US-China trade deal. In fact, optimism in the US-China trade front has re-emerged today and is pushing US yields to fresh tops beyond 1.85% and is at the same time sponsoring the sell off in the safe havens like the Japanese JPY. On the latter, USD/JPY is trading in fresh tops just pips away from the key 109.00 mark. In the US docket, the trade deficit shrunk to $52.5 billion in September, dropping to the lowest level in the last three years. Later in the NA session, the key ISM Non-manufacturing will be in centre stage seconded by the final October reading of the Services PMI by Markit and JOLTs Job Openings. DXY keeps the better mood in the first half of the week so far, all in response to the recent improvement in the US-China trade front and as market participants appear to have digested last week’s ‘hawkish cut’ by the Fed. The Fed is now expected to remain vigilant mainly on the global scenario, where trade concerns and the impact on global growth remain in centre stage amidst some loss of momentum in the domestic economy. On the broader view, the constructive outlook in DXY looks a bit damaged but it still is in play as the Fed moves into an impasse vs. the dovish stance from its G10 peers, the Dollar’s safe haven appeal and the status of ‘global reserve currency’. At the moment, the pair is gaining 0.23% at 97.79 and a break above 98.00 (high Oct.30) would open the door to 98.28 (55-day SMA) and finally 99.25 (high Oct.8). On the downside, immediate contention aligns at 97.11 (monthly low Nov.1) seconded by 97.03 (monthly low Aug.9) and then 96.67 (low Jul.18).