Dollar softens broadly as markets position for US-China trade discussions

The US dollar index has weakened 0.3% to 104.50 during European trading hours as investors reduce long positions ahead of high-stakes US-China trade negotiations. EUR/USD advanced to 1.0865, while GBP/USD climbed to 1.2680, benefiting from the broad-based dollar weakness. Market sentiment remains cautious, with traders unwilling to commit to significant directional bets before understanding the potential outcomes of trade talks. The dollar's retreat also reflects profit-taking after recent gains driven by robust US economic data. Asian currencies showed mixed performance, with USD/JPY declining while USD/CNH remained stable. Technical analysis shows the dollar index approaching key support at 104.30, which if broken could accelerate the downward move. The outcome of US-China negotiations will likely determine whether this dollar weakness extends or reverses in coming sessions.