USD strengthens broadly as Trump softens TACO stance, markets recalibrate

The US Dollar Index has gained 0.4% to 107.85 as markets reassess positioning following Trump's apparent retreat from aggressive TACO (trade and currency objectives) policies. EUR/USD declined 0.35% to 1.0420, while USD/JPY advanced 0.6% to 156.20, marking the dollar's strongest performance this week. The policy shift has reduced immediate tariff concerns, allowing traders to refocus on fundamental USD strength driven by robust US economic data and hawkish Fed expectations. Markets are pricing in sustained higher US rates, with the 10-year Treasury yield holding above 4.60%. Technical indicators show USD/JPY testing resistance at 156.50, with momentum indicators suggesting further upside potential. EUR/USD has broken below the 1.0450 support level, opening the path toward 1.0380. The dollar's broad-based strength reflects renewed confidence in US economic exceptionalism and reduced geopolitical uncertainty.