Investors weigh a 30.5% chance of an immediate Fed rate hike amid elevated geopolitical tensions and inflation concerns.
EUR/USD climbed to 1.1390 in Asian trading, extending gains for a second day as the US Dollar (USD) softened ahead of the Federal Reserve’s policy decision. Markets expect the Fed to hold rates steady but assign a 30.5% probability to an immediate hike, reflecting heightened uncertainty.
Traders are also pricing in a 76.6% likelihood of a September rate increase, signaling expectations for prolonged elevated borrowing costs. Geopolitical risks, including recent Middle East hostilities, may provide temporary support for the USD by stoking inflation fears.
The Iranian Revolutionary Guard Corps (IRGC) launched a missile strike on a US base in Jordan, which was intercepted without casualties. The incident escalated tensions, prompting US retaliatory airstrikes in Iraq against Iran-backed groups.