Geopolitical risks from Iran boost USD demand, offsetting caution ahead of the Fed’s policy decision later today.
The US Dollar Index (DXY) remains steady below 101.50 in Asian trading, consolidating near a one-month high as investors await the Federal Reserve’s policy announcement. The index retains a bullish bias amid heightened geopolitical tensions following Iran’s missile strikes on US forces in the Middle East.
Traders are pricing in a risk premium for the USD, traditionally a safe-haven asset, as Iran’s actions and US warnings of potential military retaliation raise concerns over regional stability. Meanwhile, surging crude oil prices revive inflation fears, supporting expectations for a more hawkish Fed stance.
Market participants remain cautious, avoiding aggressive bets ahead of the FOMC decision. The Fed’s guidance on future rate moves will be closely watched for clues on the policy trajectory, capping near-term upside for the DXY.