Dollar Holds Steady Amid Middle East Tensions, Fed Decision Looms

The US dollar continued its upward trend on Wednesday, July 29, as investors awaited the Federal Reserve's interest rate decision later in the day. The dollar was perched near a one-month high, buoyed by safe-haven flows after hostilities flared anew in the Middle East.

Oil prices rose after the US military intercepted multiple ballistic missiles launched by Iran towards US forces in the region, adding to inflation fears. This left the euro languishing near a one-month low at $1.1386, having fallen 0.3% for the month thus far.

Fabien Yip, a market analyst at IG, expects the Fed to keep interest rates on hold later on Wednesday. He believes the dollar will remain strong due to ongoing uncertainties in the Middle East and the US's hawkish stance relative to other central banks.