Markets Turn Cautious Amid Middle East Tensions and Fed Decision

Financial markets took on a cautious tone midweek as escalating tensions in the Middle East drove investors towards safe-haven assets. Market participants also remained on the sidelines ahead of the Federal Reserve's interest rate decision and accompanying policy statement, due later in the American trading session.

The US Dollar Index struggled to gain from the broader risk-averse mood, remaining steady at around 101.30 during the European session. The dollar's limited reaction came as investors waited for the Federal Reserve's policy announcement, which is expected to provide further direction for currency markets.

The EUR/USD traded in a narrow channel at around 1.1400 early Wednesday, reflecting the broader caution across financial markets. The pair followed small gains recorded on Tuesday and remained relatively stable as investors avoided making significant moves before the Federal Reserve's announcement.