The US Dollar Index (DXY) surged 0.8% on Wednesday, its largest single-day gain in three weeks, after Federal Reserve Chair Jerome Powell signaled that interest rates would remain unchanged through at least the third quarter of 2026.
Key Takeaways
- EUR/USD dropped to 1.0685, breaking key support at 1.0720
- GBP/USD fell to 1.2540, losing 65 pips in the session
- USD/JPY climbed to 157.80, approaching the intervention zone
- US 10-year yields rose to 4.52%
What the Fed Said
"The Committee sees no urgency to adjust policy given the resilience of the labor market and sticky inflation in services sectors." — Jerome Powell, FOMC Press Conference
Markets had previously priced in a 35% chance of a rate cut by September. That probability has now dropped to just 12%, according to CME FedWatch.
Impact on Major Pairs
| Pair | Change | Key Level |
|---|---|---|
| EUR/USD | -0.72% | Support: 1.0650 |
| GBP/USD | -0.51% | Support: 1.2500 |
| USD/JPY | +0.65% | Resistance: 158.00 |
| AUD/USD | -0.83% | Support: 0.6420 |
What's Next
Traders should watch Friday's Non-Farm Payrolls report. A strong number would further cement the "higher for longer" narrative, potentially pushing DXY above 106.00. Conversely, a weak report could trigger profit-taking on USD longs.
Key resistance for DXY sits at 105.80 (April high), with support at 104.50 (50-day MA).