USD hits 3-year lows as Asian and European markets show mixed signals

The US Dollar Index has fallen to three-year lows near 101.50, declining 0.4% in Asian trading as mixed market sentiment prevails across global exchanges. Asian markets showed divergence with Japan's Nikkei gaining 0.6% while China's Shanghai Composite dropped 0.8%. European indices opened cautiously, with DAX flat and FTSE 100 down 0.2%. The dollar's weakness stems from growing expectations of Federal Reserve rate cuts in September, with markets pricing in a 75% probability of easing. Technical indicators suggest the DXY could test psychological support at 101.00, while resistance emerges at 102.20. Currency pairs benefiting from dollar weakness include EUR/USD trading near 1.0950 and GBP/USD approaching 1.2750. Traders await Friday's US employment data which could either accelerate the dollar's decline or provide temporary relief if job growth exceeds expectations.