USD weakens as Treasury finds no currency manipulation globally

The US dollar index declined 0.2% following the Treasury Department's semi-annual currency report, which found no major US trading partners guilty of currency manipulation. This regulatory clarity removed a potential source of trade tensions and geopolitical risk that had been supporting safe-haven dollar demand. The report's release coincided with a broader risk-on sentiment in markets, prompting flows out of the greenback into higher-yielding currencies. EUR/USD gained 25 pips to 1.0875, while GBP/USD advanced to 1.2650. The Treasury's assessment particularly benefits Asian currencies, with USD/JPY falling below 149.50 and USD/CNY easing concerns about potential trade conflicts. Technical indicators suggest the dollar index faces immediate support at 104.20, with a break below potentially accelerating the decline toward the 103.80 level. Traders should monitor upcoming US economic data for further directional cues on dollar positioning.