FX.co ★ Dollar Steady on Fed Rate Hold, MidEast Tensions

The US dollar index remained stable at approximately 98.9 on Thursday, following gains earlier in the week. This was a result of the Federal Reserve maintaining interest rates at their current level and emphasizing a careful, data-driven approach moving forward. Fed Chairman Jerome Powell indicated that there might be an uptick in inflation in the upcoming months, attributing this to the effects of President Donald Trump's tariffs. The Fed also revised its growth forecasts downward and indicated that two 25 basis point rate cuts are anticipated in 2025, which took the markets by surprise as they had only anticipated one such reduction. Additionally, the dollar received support due to increased demand for safe-haven assets against a backdrop of rising geopolitical tensions. Speculation grew regarding potential US military involvement in the Israel-Iran conflict, amid reports that Washington might be preparing for a strike on Iran. In response, Iran's Supreme Leader Ayatollah Ali Khamenei warned that US military intervention could result in "irreparable damage."