USD weakens as Fed rate cut hopes rise, oil extends decline

USD index futures declined 0.4% in early Asian trading as market optimism for Federal Reserve rate cuts strengthened, driven by reports that Nvidia may resume AI chip sales to China despite trade tensions. The potential easing of tech restrictions boosted risk appetite across markets, with S&P 500 futures climbing 0.8% and Nasdaq futures up 1.1%. Oil prices extended their recent slump, with WTI crude falling 1.2% to $67.80 per barrel amid concerns over global demand weakness. Bitcoin retreated 0.5% to $97,200 after touching weekend highs near $98,500. The improved risk sentiment suggests potential USD weakness against major currencies, particularly commodity-linked pairs like AUD/USD and NZD/USD. However, traders remain cautious given recent market volatility and upcoming US economic data releases. Technical indicators show USD/JPY testing support at 154.20, while EUR/USD approaches resistance at 1.0520.