USD retreats across majors after Waller's dovish Fed comments

The US dollar experienced broad-based weakness during European trading hours, with major pairs posting gains against the greenback following dovish comments from Federal Reserve Governor Christopher Waller. EUR/USD climbed 0.4% to test 1.0920 resistance, while GBP/USD advanced 0.35% toward 1.2850. The dollar index (DXY) fell 0.5% to 103.20, breaking below key support at 103.50. Waller's remarks suggested the Fed may be approaching the end of its tightening cycle sooner than markets anticipated, citing moderating inflation pressures and potential economic headwinds. USD/JPY dropped 0.6% to 148.50 as safe-haven flows benefited the yen. The dovish shift in Fed communication has prompted traders to reassess rate differential trades that had supported dollar strength. Technical indicators show the DXY approaching oversold conditions, with the next major support at 102.80. Markets now await next week's FOMC minutes for further clarity on the Fed's policy trajectory.