The dollar jumped yesterday, with DXY breaking above 101.0. Very strong US PMIs, higher oil prices and soft risk sentiment have all contributed to the bullish narrative, although the move is starting to look stretched relative to fundamentals. We are cautious in calling for a bottom in the dollar just yet because any upside surprise in upcoming US data releases can easily prompt markets to fully price in an October Fed hike and prop up short-term rates even more. But if this risk doesn’t materialise, we expect a correction in DXY in the coming weeks, with a return to the 100-100.5 area.USD/JPY remains another source of potential downside risk for the dollar. The rapid rally in the pair may draw Japanese authorities to intervene - remember last week’s reported rate check - and that could easily spill over into a weaker USD across the board. Without any intervention, a return to above 160.0 levels looks inevitable after the dovish surprise by the Bank of Japan last week.Today, focus will be on the summit between President Trump and Chinese leader Xi Jinping. There is a history of Trump striking a more conciliatory tone in face-to-face events, and Scott Bessent has already announced an extension of the trade truce by two months. We’re not sure the dollar will respond much to positive US-China headlines at this stage, with any positive effect probably more visible in AUD and NZD. Those could emerge more prominently as proxies for CNY after the People's Bank of China set a weaker fixing for the yuan for the second consecutive day.