US Dollar Index (DXY) rally stalls right below 99.00 ahead of US GDP, Fed's decision

• The Dollar stands tall, underpinned by strong US data and recent trade deals.
• Later today, preliminary US GDP data is expected to confirm a significant economic recovery in Q2.
• The strong US data seen recently might prompt the Fed to deliver a "hawkish hold" on Wednesday.

The US Dollar consolidates gains on Wednesday, following a four-day rally, as a series of trade deals between the US and key partners and relatively upbeat data have provided support ahead of a slew of key macroeconomic releases in the second half of the week.

The USD Index, which measures the Greenback against a basket of the most traded currencies, is trading at 98.80 during Wednesday's European session. The pair is posting minor losses on the daily chart but remains nearly 2% above last week's lows and on track for its first monthly gain this year.

US GDP and ADP Employment might support the Fed's cautious stance

US Data released on Tuesday revealed a larger-than-expected decline in US JOLTS Job Openings, suggesting some cooling in the labour market, while the Conference Board's Consumer Confidence Survey rose beyond expectations, yet with US consumers showing concerns about the impact of tariffs on their economies. The Greenback pulled back after the data release.

Later today, the US ADP report is expected to show a significant recovery in employment creation in June, while the preliminary GDP is likely to reveal that the economy grew at a 2.4% pace in Q2, after a 0.5% contraction in the first months of the year.

These figures are likely to give the Fed further reasons to stick to its "patience" rhetoric, after keeping interest rates on hold, as widely expected. Hawkish comments from Fed Chairman Powell might dampen hopes of a September cut further and give an additional boost to the US Dollar.