USD edges lower as European session shows cautious risk sentiment

The US dollar traded lightly lower during the European morning session on June 18, with major pairs showing modest gains against the greenback amid cautiously improved risk sentiment. EUR/USD advanced approximately 0.15% to test the 1.0740 resistance level, while GBP/USD remained supported near 1.2680 ahead of key UK inflation data. Market participants maintained a defensive stance with limited conviction in directional moves, as traders positioned cautiously ahead of the upcoming FOMC meeting. Asian equity markets showed mixed performance overnight, contributing to the subdued risk appetite. The dollar index (DXY) retreated from recent highs near 105.50, finding support around 105.20. Currency volatility remained compressed with implied volatilities near recent lows, suggesting markets are awaiting fresh catalysts from central bank communications and economic data releases later in the week.