Euro Gains Ahead of Fed Decision Amid Rare Policy Uncertainty

The Euro has continued its upward trend against the US Dollar (USD), reaching around 1.1390 during Asian hours on Wednesday, as investors await the Federal Reserve's (Fed) policy decision later this week.

Market expectations are that the Fed will leave interest rates unchanged, but a significant 30.5% chance of an immediate rate hike has been priced in by traders, signaling rare policy uncertainty.

This unusual level of uncertainty comes as the European Central Bank (ECB) is widely expected to raise interest rates in September, with a 76.6% probability factored into market expectations.

The US Dollar may find support due to renewed hostilities in the Middle East, which have reignited geopolitical tensions and kept investor focus on inflationary risks and the broader interest rate outlook in the United States.