USD Weakens Broadly as Fed Pivot Boosts Risk Currencies

The US dollar index (DXY) declined 0.8% to 101.50 as markets interpreted Federal Reserve communications as signaling a potential policy pivot, triggering a broad-based rally in risk currencies. GBP/USD advanced 0.6% to 1.3520, while USD/JPY retreated 1.1% to 145.80 as the yen benefited from both dollar weakness and safe-haven flows. USD/CHF fell 0.7% to 0.8650, with the Swiss franc gaining on its traditional defensive appeal. EUR/GBP remained relatively stable at 0.8480, as both currencies gained against the dollar. The market's risk-on sentiment was evident as commodity currencies outperformed, with AUD/USD and NZD/USD posting gains exceeding 1%. Technical indicators suggest the dollar's downtrend may extend, with the DXY approaching key support at 101.00. Traders are positioning for continued dollar weakness unless upcoming US economic data significantly exceeds expectations.