The dollar index was little changed around 101.3 on Wednesday after a volatile start to the week, as investors awaited the Federal Reserve’s policy decision, where interest rates are widely expected to be left unchanged. Even so, markets are still pricing in roughly a one‑in‑three chance of a 25-basis-point hike—an unusually high degree of uncertainty at this stage compared with recent years.
Traders also assign close to an 80% probability to a rate increase in September, reinforcing expectations that borrowing costs may remain elevated for longer. At the same time, investors kept a close eye on rebounding oil prices and a renewed pickup in inflation worries after fresh hostilities erupted in the Middle East. The US military reported it had successfully intercepted what it called a surprise Iranian attack aimed at US forces across the region, stoking geopolitical tensions once again.
