USD Weakens as Asian Markets Fall, Oil Surges 3%

The US dollar faced selling pressure during Asian trading hours as regional equity markets declined and oil prices surged 3%, creating a risk-off environment that paradoxically weighed on the greenback. Asian stock indices retreated following Friday's mixed US close, where the S&P 500 ended flat despite posting strong monthly gains. The combination of rising oil prices and equity weakness suggests growing concerns about stagflation risks, which could complicate central bank policy decisions. Higher oil prices typically support commodity currencies like CAD and NOK while pressuring oil-importing nations' currencies. The dollar's weakness despite the risk-off tone indicates traders may be positioning for softer US economic data ahead. Technical levels show USDJPY testing support near 156.50, while EURUSD pushed above 1.0550 resistance. Traders should monitor oil price movements closely as sustained gains could further impact currency dynamics.