Dollar Falls as FOMC Keeps Interest Rates Unchanged Amid Rising Inflation Expectations

The US dollar index (DXY) fell to a one-week low on Wednesday after the Federal Reserve kept interest rates unchanged. The DXY dropped by -0.48% on the day, marking its lowest point since last week.

Crude oil prices surged more than +6% after President Trump said the US would 'hit Iran hard' following a recent attack from Iran that targeted a US base in Jordan. This jump in crude prices raised inflation expectations and could prompt the Fed to tighten monetary policy, supporting the dollar.

However, the FOMC ultimately decided to keep the fed funds target range unchanged at 3.50% to 3.75%, with three dissenting votes from Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan.