USD weakens as China bets Trump will avoid market-disrupting trade war

USD/JPY declined 0.4% to 149.20 as reports emerged that China's Xi Jinping believes Trump won't risk stock market turmoil to sustain a prolonged trade conflict. The dollar index fell 0.3% to 103.85 amid growing concerns about US-China trade tensions potentially escalating. Market participants are reassessing the likelihood of aggressive tariff implementations, with risk sentiment improving on expectations that Trump may prioritize market stability over trade confrontation. Asian equities gained 1.2% while US futures pointed higher by 0.8%. The yen strengthened as safe-haven flows moderated, with USD/JPY finding support at 149.00 (daily pivot) and facing resistance at 149.80 (50-day MA). Traders are closely monitoring any official statements from either administration, as trade policy clarity could significantly impact dollar positioning. A de-escalation in rhetoric could further pressure the greenback against major counterparts.