The US dollar traded higher for the second consecutive day against a basket of currencies. The greenback strengthened sharply on Wednesday, following hawkish comments from Fed Chairman Jerome Powell, extending its gains to the 99.25 area in Thursday's European session, as investors weighed the scope of a Sino-US trade deal.

US President Donald Trump said he had a "wonderful" conversation with his Chinese counterpart, Xi Jinping, which concluded with an agreement to reduce tariffs in exchange for free trade in rare earths and minerals from China and a pledge to resume purchases of US soybeans. Trump said a trade deal would be reached soon.

Xi Xi was slightly more concise, asserting that the two sides had reached consensus on key economic and trade issues and urging them to complete the work as soon as possible to deliver tangible results and "calm the Chinese, US and global economies."

On Thursday, the Federal Reserve cut interest rates by 25 basis points to a range of 3.75%-4.0% and announced the end of its quantitative easing program, as expected. The dollar remained little changed until Fed Chair Jerome Powell warned that a December rate cut was far from certain, as conflicting employment and inflation outlooks have led to widely differing views on how to proceed with monetary policy.

Thursday's focus will be on the ECB's monetary policy decision. The bank is widely expected to keep interest rates unchanged, although markets are curious to see if further rate cuts are in store. ECB President Christine Lagarde's comments at the press conference will be closely analyzed and could have a significant impact on the euro, which will also affect the USD Index. (alg)

Source: FXstreet