USD index drops 0.4% as major pairs rally against weakening greenback

The US dollar index (DXY) has declined 0.4% to 105.20 in early July trading, extending June's 1.2% loss as major currency pairs rally against the greenback. EUR/USD gained 0.35% to 1.0745, while GBP/USD advanced 0.3% to 1.2680, benefiting from broad-based dollar weakness amid growing expectations of Federal Reserve policy easing. The dollar's struggles reflect shifting market sentiment following softer US economic data and reduced hawkish rhetoric from Fed officials. Asian currencies also participated in the rally, with USD/JPY falling 0.25% to 160.80 despite Bank of Japan's continued ultra-loose policy stance. Technical analysis shows the DXY breaking below its 50-day moving average at 105.50, opening the path toward 104.80 support. Traders are positioning for potential further dollar weakness ahead of this week's key US data releases, particularly Friday's employment report which could cement expectations for Fed rate cuts if job growth disappoints.