U.S. Dollar Tumbles Amid Recession Fears and Rate Cut Prospects

The U.S. dollar faced significant losses while the Japanese yen weakened following a strong rise. Market volatility is driven by disappointing U.S. jobs data, tech earnings fears, and concerns over China's economy, prompting a global sell-off. Central banks' divergent policies contribute to the uncertainty.

The U.S. dollar experienced heavy losses on Tuesday, with the yen also declining after a sharp rise in the previous session. This comes as traders tackle the unwinding of popular carry trades and anticipate potential deep rate cuts from the Federal Reserve.

The yen dropped 1% on Tuesday to 145.78 per dollar, following a five-session rise that saw it reach a seven-month high of 141.675 on Monday. It also weakened against the Australian dollar, euro, and sterling.

Softer-than-expected U.S. jobs data from last week, coupled with disappointing tech earnings and concerns over the Chinese economy, sparked a global sell-off in stocks, oil, and high-yielding currencies. On Monday, a global exodus from riskier assets led to a dramatic decline in equity markets as recession fears gripped investors.

(With inputs from agencies.)