The dollar index hovered around 99.5 on Wednesday after falling for two consecutive sessions, as investors awaited the latest Federal Reserve policy decision. The central bank is widely expected to keep interest rates unchanged, with traders watching for guidance from Fed Chair Jerome Powell on how oil market volatility could shape the policy outlook. Rising oil prices have stoked inflation concerns, while mixed labor market signals offered little clarity on future rates. Markets do not anticipate Fed easing until at least September or October, with only a single rate cut expected this year. Meanwhile, Iran intensified attacks on energy infrastructure in the Middle East, while US allies rejected President Donald Trump’s call to secure commercial shipping through the Strait of Hormuz. The dollar has fallen against all major currencies this week, sliding most sharply versus the aussie after the Reserve Bank of Australia delivered consecutive rate hikes.
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