Dollar Steady Ahead of Fed Decision as Middle East Tensions Escalate

The US dollar held steady on Wednesday ahead of the Federal Reserve's interest rate decision, despite a slight decline in its index to 101.27.

Hostilities in the Middle East flared anew, with the US and Saudi Arabia launching strikes on Iran-backed groups in Iraq, sending oil prices higher.

The dollar had reached a one-month high of 101.63 on Tuesday, but traders are waiting for the Federal Open Market Committee's decision, which markets are pricing at a roughly 30% chance of a 25-basis-point hike.

Sim Moh Siong, a strategist at OCBC, said that even if there is no rate hike, 'the messaging will be more important than the decision.' If the Fed stays on hold and provides hawkish guidance, he believes the dollar will stay supported.