If yields stop rising, a major incentive for extending USD longs is diminished. The question is, how far might the drop in the USD extend? Fair value for the DXY, based on nominal 2Y yield differentials, sits at 104.33. By this measure at least there is some room for the index to soften still. 

Today’s data run may add to pressure on the USD in the short run. While Q3 GDP data Thursday is expected to be firm, October PMIs may look a little soft, adding to concerns that the US economy is slowing a bit more quickly into Q4.