The US dollar has stabilized against major currencies as continuous uncertainty about the fate of Washington and China's trade negotiations forces investors to exercise caution.

Over the past three days, the USD index lost about 0.5%. Today, it is trading with an increase near the level of 97.9.

"There is a mood of weak risk aversion in the markets. The tone is somewhat cautious, and reports on US-China trade negotiations are mixed." Westpac's analysts said.

Thus, traders are waiting for the publication of the minutes from the last Fed meeting, which took place at the end of last month. Investors are hoping to get more hints regarding the future plans of the regulator after three consecutive cuts in Federal funds rates in July, September and October. The futures market, in turn, puts in the quotes a probability of 55% that the rate will remain at the current level (1.5-1.75%) at least until the middle of next year.

Meanwhile, a short-term publication of the minutes of the October meeting of the Fed may support the dollar, given the fact that several non-voting FOMC members expressed their dissent on the issue of reducing the Federal funds rate to 1.75%. The split in the ranks of the Central Bank, as a rule, plays into the hands of the national currency. At the same time, the long-term prospects of the follar are far from being drawn in rosy colors.

Fed Chairman Jerome Powell is of the opinion that the US economy is still strong, but a slowdown suggests a stimulating nature of the monetary policy of the regulator. According to the head of the Federal Reserve, the US labor market has developed a favorable situation, but it remains a mystery why we are not seeing a sharp increase in wages. This may be due to suppressed inflation and the fact that weak economic growth has already become the norm. At the same time, J. Powell acknowledges the presence of the downside risks. The global economic slowdown and trade issues are still on the agenda. Of course, everything can change if US President Donald Trump decides to postpone the December round of tariffs on Chinese products or abandon it altogether. Washington can combine this step with the abolition of previously imposed duties, but so far, adheres to a tough negotiating position.

On Tuesday, D. Trump threatened China again with an increase in duties if a favorable US trade agreement is not concluded.

The escalation of the trade war and the associated slowdown in the US economy may be the main reasons why the Fed will resume the cycle of easing the monetary policy.

A day before, the head of the Federal Reserve Bank of New York, John Williams, said that if the US GDP would grow below the trend as a result of the influence of global factors, then the US Central Bank could make monetary policy more accommodative than it is now.

He also said that large-scale interventions of the Fed in the money market have had the desired effect.

"Since the Fed began to increase the supply of short-term and long-term liquidity through the purchase of government bonds, we saw that the markets are really calming down and the rates are becoming stable. We are very focused on the end of the year and we hope that clearly announced monetary interventions will help to keep calm. So far, everything looks very good." said J. Williams.

Meanwhile, experts from Morgan Stanley believe that the Federal Reserve Bank of New York has overdone the issue of eliminating the crisis in the money market. Thus, they predict the appearance of an excess supply of American currency.

"So far, the liquidity provided by the Fed is absorbed due to the end-of-year demand from commercial banks. As soon as this period ends, the dollar deficit may turn into its excess, which will contribute to the weakening of the USD along with the reduction in divergence in the economic growth of the USA and other countries."strategists at Morgan Stanley noted.

On the other hand, according to analysts at Standard Chartered, the expansion of the monetary base in the United States since 2011 has invariably served as a good indicator of the strength of the euro.

"The uncertainty caused by the impeachment against D. Trump, as well as the US presidential election in 2020, may reduce the attractiveness of the dollar against the euro," they believed.

Thus, despite the fact that the American currency feels quite confident, the balance of factors is not in its favor.