Dollar Remains Firm Amid Geopolitical Tensions and Fed Decisions

The dollar remained steady as Fed Chair Jerome Powell's cautious inflation comments and Middle East tensions influenced market sentiment. Although the Fed held rates, traders anticipate upcoming cuts. The dollar's performance was strong against major currencies, while geopolitical risks fuel market anxiety.

The dollar held its ground on Thursday as market participants digested the Federal Reserve Chair Jerome Powell's careful comments regarding inflation, set against the backdrop of potential escalation in the Middle East and impending U.S. involvement, creating a frail market sentiment.

In an anticipated decision, the Federal Reserve maintained steady interest rates while signaling expectations of a half-point rate reduction within the year, despite lack of consensus among policymakers. Powell warned of a rise in goods price inflation over the summer, driven by U.S. tariffs.

Investor focus shifted to the Middle East as the Israel-Iran conflict intensified, amid concerns over U.S. involvement. The dollar index saw gains, marking its strongest weekly performance since February, as geopolitical tensions loomed.

(With inputs from agencies.)