USD softens on fiscal woes, trade tensions; gold rises

The US dollar has weakened against major rivals, with the dollar index (DXY) slipping 0.3% to 103.60, as concerns mount over the country's fiscal situation and ongoing trade tensions. The recent US credit rating downgrade by a major agency has further dampened sentiment, raising borrowing costs and adding pressure on policymakers to address the ballooning national debt. Meanwhile, gold prices have rallied 1.2% to $1,975 per ounce, benefiting from safe-haven demand amid geopolitical uncertainties and the weakening dollar. Central banks remain divergent in their policy approaches, with the Federal Reserve maintaining a hawkish stance despite growing economic headwinds, while others, like the European Central Bank and Bank of Japan, take a more cautious approach. Traders should closely monitor developments in US fiscal policy, trade relations, and central bank communications for further direction in the forex market.