USD falls across board after Powell signals dovish Fed stance

The dollar index plunged 0.8% to 103.20 following Fed Chair Jerome Powell's unexpectedly dovish remarks on Tuesday, with EUR/USD surging 0.9% to 1.0920 and GBP/USD climbing 0.7% to 1.2680. Powell suggested the Fed may pause rate hikes sooner than anticipated, citing concerns about economic headwinds and financial stability. His comments sparked a broad risk-on rally, with gold advancing $25 to $2,045/oz and emerging market currencies gaining 1-2% against the dollar. Treasury yields tumbled 15 basis points across the curve, reinforcing expectations for a less hawkish Fed trajectory. USD/JPY broke below key support at 148.50, accelerating losses to 148.20. Markets are now pricing in only a 35% chance of another rate hike this cycle, down from 65% before Powell's speech. The dovish pivot could mark a significant turning point for dollar strength if sustained.