Risk-off sentiment hits USD pairs as equity indices unwind gains

Major USD currency pairs experienced heightened volatility as US equity indices reversed earlier gains, with the S&P 500 falling 1.2% and Nasdaq dropping 1.5%. EUR/USD consolidated around 1.0920 after reaching intraday highs of 1.0950, while GBP/USD pulled back to 1.2200 from 1.2240. USD/JPY found support at 149.50 as risk-off flows benefited the yen. The Russell 2000's 2.1% decline highlighted concerns about small-cap vulnerability in a slowing growth environment. Fresh long positions established after the CPI release are being unwound as traders reassess the sustainability of the dollar's weakness. Technical indicators suggest short-term oversold conditions in the dollar, potentially setting up a relief bounce. However, the broader trend remains bearish for USD pairs unless upcoming economic data significantly beats expectations. Traders should watch for any stabilization in equity markets as a potential catalyst for USD recovery.