US Dollar slides to 4-week lows, farther below mid-96.00s

   •  Expectations of a dovish Fed kept exerting downward pressure on the USD.
   •  The prevalent risk-off mood does little to stall the ongoing corrective slide.

The greenback, as measured by the key US Dollar Index extended its retracement from last week's 1-1/2 year tops and dropped to 4-week lows, below mid-96.00s on Tuesday.

Growing speculations that global growth concerns might prompt the US central bank to signal a pause its rate hike cycle at this week's meeting turned out to be one of the key factors exerting downward pressure on the greenback.

Bets for a dovish Fed rose after the US President Donald Trump, adding to his recent criticism, suggested in a tweet on Monday that it was "incredible" for the central bank to even consider tightening, given the global economic and political uncertainties. 

Market expectations were evident from the ongoing fall in the US Treasury bond yields, which further dented the already weaker sentiment surrounding the greenback. In fact, yields on the benchmark 10-year US bonds fell to the lowest level since August ahead of a two-day FOMC policy meeting, starting today. 

Meanwhile, the prevalent risk-off mood, triggered by the overnight rout on Wall Street following a spate of weak data globally, did little to boost the greenback's relative safe-haven status and stall the ongoing slide to levels below mid-96.00s.

Moving ahead, today’s US economic docket, featuring the release of second-tier housing market data, is unlikely to be a game changer but might still be looked upon for some short-term trading opportunities later during the early North-American session.

Technical levels to watch