US Dollar hits over 1-week low, risks breaking below 94.00 handle

   •  US-China trade war fears kept exerting downward pressure on Thursday.
   •  Fed rate hike prospects/ uptick in the US bond yields helped limit deeper losses.
   •  Today’s key focus will be on the release of latest FOMC meeting minutes.

Prolonged trade tensions kept the USD bulls on the defensive on Thursday, dragging the US Dollar Index to the 94.00 handle, or over one-week lows in the last hour.

Investors remained cautious ahead of a July 6 deadline when the US is set to impose fresh tariffs of up to $50 billion on Chinese products, with China vowing to retaliate with the same value of tariffs on the US goods and heightening fears of a potential full-blown US-China trade war.

Meanwhile, the incoming positive UK economic data continues to underpin the British Pound. This coupled with overnight news that some ECB member sees end-2019 rate hike as too late provided a minor lift to the common currency and further contributed to a mildly weaker tone surrounding the buck. 

However, a modest uptick in the US Treasury bond yields, supported by the perception of the relative strength of the US economy and prospects of further Fed monetary policy tightening through the end of this year, underpinned the greenback and helped limit deeper losses, at least for the time being.

The latest FOMC meeting minutes, due later today will provide fresh clues over the US central bank's monetary policy outlook, which along with Friday's official US monthly jobs report, popularly known as NFP, will influence the USD price dynamics in the near-term. 

Ahead of the key event risks, today's US economic docket, featuring the release of ADP report on private sector employment and ISM non-manufacturing PMI, might provide some short-term trading impetus later during the early North-American session.

Technical levels to watch

A follow-through weakness below the 94.00 handle is likely to accelerate the slide towards last Thursday's swing low near the 93.85 level before the index drops further towards 93.50-45 support area.

On the upside, the 94.65-70 area now seems to have emerged as an immediate hurdle, above which the momentum is likely to get extended back towards YTD highs near the 95.00-95.10 region.