Fed Decision and Mideast Tensions Spook Markets

Financial markets turned cautious midweek due to escalating tensions in the Middle East and anticipation of the Federal Reserve's interest rate decision.

The US Dollar Index struggled to gain traction from the broader risk-averse mood, remaining steady at around 101.30 during the European session.

The EUR/USD currency pair traded in a narrow channel at around 1.1400 early Wednesday, reflecting the cautious approach of investors.

GBP/USD moved higher during the early European session, correcting higher and trading above the 1.3300 level.

Data from Australia also influenced currency market movements on Wednesday, with annual inflation measured by the change in the Consumer Price Index (CPI) declining to 3.8% in June from 4% in May.