Dollar Plunges as Divided Fed Holds Rates Amid Escalating Middle East Tensions

The US Dollar Index (DXY) plummeted by over 0.8% after the Federal Reserve decided to hold interest rates steady, despite a deeply divided vote among policymakers.

Several Fed members pushed for a rate hike due to persistent inflation concerns, while others advocated for a cut to support a slowing economy, leaving investors uncertain about the dollar's near-term trajectory.

As a result, major currencies like the euro and Japanese yen strengthened against the greenback, with EUR/USD climbing above 1.0850 and USD/JPY slipping below 150.00.

In energy markets, Brent crude futures surged more than 4% to trade above $82 per barrel following reports of a significant military strike in a key oil-producing region, raising the risk of supply disruptions through the Strait of Hormuz.