USD weakens as Powell probe sparks safe-haven flows to gold and JPY
The US dollar index declined 0.4% to 108.20 as markets digested news of a federal investigation into Fed Chair Jerome Powell, triggering risk-off sentiment across forex markets. Treasury Secretary Scott Bessent's warning about potential market destabilization sent traders seeking safe havens, with gold surging 1.2% to $2,680/oz and USD/JPY dropping 85 pips to 156.40. The investigation centers on Powell's congressional testimony regarding Fed building renovations, adding uncertainty to monetary policy expectations. EUR/USD capitalized on dollar weakness, climbing 45 pips to 1.0315, while GBP/USD advanced to 1.2280. Technical indicators show the dollar index breaking below its 50-day moving average at 108.50, with next support at 107.80. The political pressure on the Fed could complicate rate decisions and increase market volatility in coming sessions.
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