2020.08.2507:35:00UTC+00Dollar Drops On U.S.-China Trade Hopes

The U.S. dollar depreciated against its major counterparts in the Asian session on Tuesday, as indications of progress in U.S.-China trade negotiations underpinned investor sentiment.

Top Chinese and U.S. negotiators held a telephonic conversation and agreed to "push forward" their Phase 1 trade deal reached between the two countries in January.

Washington said the parties "addressed steps that China has taken to effectuate structural changes called for by the agreement".

Beijing said the two sides had a "constructive dialogue" on creating conditions and atmosphere to continue to push forward the implementation of the Phase one agreement.

Economic reports on U.S. home prices, consumer confidence and new home sales are due later in the session.

Investors looked ahead to the U.S. Federal Reserve's annual Jackson Hole meeting later in the week for further cues on U.S. monetary policy.

The greenback dropped to 1.3116 against the pound and 1.1815 against the euro, from its early highs of 1.3054 and 1.1784, respectively. If the greenback falls further, 1.35 and 1.20 are likely seen as its next support levels against the pound and the euro, respectively.

The greenback edged down to 0.9105 against the franc early in the session and held steady afterwards. The pair had ended Monday's trading at 0.9118.

The greenback pulled back to 1.3212 against the loonie, from a 5-day high of 1.3239 set at 1:10 am ET. The greenback is poised to locate support around the 1.31 level.

After falling to 0.7183 against the aussie at 10:00 pm ET, the greenback moved sideways in subsequent deals. At yesterday's close, the pair was worth 0.7161.

In contrast, the greenback appreciated to a 5-day high of 106.17 against the yen, after a brief drop to 105.87 at 10:00 pm ET. The next likely resistance for the greenback is seen around the 110.00 level.

Erasing its early fall, the greenback rose back to 0.6520 against the kiwi. This may be compared to a 5-day high of 0.6515 seen at 8:15 pm ET. The greenback is likely to challenge resistance around the 0.62 level.

Looking ahead, German Ifo business sentiment index for August is due in the European session.

U.S. consumer sentiment index for August, new home sales for July, Federal Housing Finance Agency's house price index and S&P/Case-Shiller home price index for June are scheduled for release in the New York session.