USD Index drops to 3.3-year low on trade uncertainty, gold rallies

The US Dollar Index declined 0.32% to reach its lowest level in over three years, extending Monday's losses as trade policy uncertainties weigh heavily on the greenback. Markets are pricing in increased risk as multiple nations scramble to negotiate trade agreements with the US ahead of potential tariff implementations by President Trump in July. The dollar weakness has sparked a flight to safe-haven assets, with gold surging in response to the currency's decline. The persistent uncertainty surrounding US trade policies continues to undermine dollar strength, with investors reducing exposure to USD-denominated assets. Technical indicators suggest further downside potential for the dollar index, with key support levels already breached. The combination of trade tensions and dollar weakness could accelerate if negotiations fail to produce favorable outcomes, potentially pushing the index toward multi-year support levels near the 100 mark.