Dollar Index Extends Rally on Powell's Hawkish Policy Guidance

The US Dollar has strengthened across all major pairs, with DXY climbing 0.5% to 106.80 following Fed Chair Powell's hawkish policy remarks at the latest FOMC meeting. EUR/USD dropped 0.4% (45 pips) to 1.0520, while GBP/USD fell 0.6% (75 pips) to 1.2650 as traders price in a prolonged period of elevated US interest rates. Powell emphasized that inflation remains above target and the Fed will maintain restrictive policy until clear evidence of sustained disinflation emerges. USD/JPY advanced to 154.80, approaching intervention levels, while EUR/GBP held steady at 0.8320. Market positioning data shows speculative dollar longs at their highest since March 2023. Technical analysis indicates EUR/USD testing support at 1.0500, with GBP/USD eyeing the 1.2600 psychological level. The dollar's broad strength suggests continued momentum ahead of Friday's US employment data.