USD Weakens as US-China Trade Deal Optimism Boosts Risk Assets

The US dollar has retreated across major pairs as markets anticipate progress in US-China trade negotiations, spurring risk-on sentiment globally. EUR/USD advanced 0.25% to test 1.1620 resistance, while USD/JPY pulled back from February highs near 150.50. Risk-sensitive pairs showed particular strength, with AUD/USD climbing 0.4% to 0.6580 and NZD/USD gaining 0.35% to 0.6020. The improved trade outlook has reduced safe-haven demand for the dollar and yen, with investors rotating into commodity currencies. Markets are now positioning ahead of this week's critical central bank meetings, including the Federal Reserve and ECB policy decisions. Technical indicators suggest USD/JPY faces strong resistance at 151.00, while EUR/USD needs to decisively break above 1.1650 to confirm bullish momentum. Traders should monitor any concrete trade deal announcements which could accelerate current trends.