On Wednesday, the US dollar suffered a Waterloo, with this move directly smashing the dollar index down by 0.4%, marking the worst single-day decline in three months—the last time it was this awkward was in mid-September. The cause? After the Federal Reserve announced a 25 basis point rate cut, Powell's remarks hinted at a different tone in the market.

At US banks, strategist Alex Cohen caught a key signal: "Powell's comments on the labor market are noticeably less optimistic than before." More intriguingly, the Fed Chair focused this time on employment risks, while inflation was briefly touched upon and glossed over. This shift in attitude directly triggered a wave of dollar selling.

Macro strategist Edward Harrison offered a deeper interpretation: the current situation is a bit delicate— the Fed's dovish pace is increasingly out of sync with other central banks, which are still tightening policy and appear more hawkish. In this divergence pattern, the dollar's weakness will likely depend on how the bond market and interest rate differentials evolve. For the crypto market, a weaker dollar usually signals a window of improved liquidity.