Federal Reserve Chairman Jerome Powell said on Friday that the recent banking crisis, which led to tighter credit standards, has eased the pressure to hike interest rates. "Our policy rate may not need to rise as much as it would have otherwise," Powell added.

Regarding market expectations, Powell expressed that markets are pricing in a different rate path than the one projected by the Fed. "The risks of doing too much versus doing too little are becoming more balanced," said Powell.

Market Reaction:

The US dollar tumbled during Powell's remarks as market participants eased rate hike expectations for the June FOMC meeting and increased bets of rate cuts by year-end. The US Dollar Index tumbled to 103.00, EUR/USD jumped to 1.0820 and USD/JPY plummeted to 138.60 to 137.40.