 Trading remains subdued across the forex markets as participants brace for the dual risk events: Fed’s policy decision and the escalating tensions between Israel and Iran. Currency pairs are largely bounded inside last week’s ranges, with traders opting for caution rather than conviction. Aussie and Kiwi lead this week’s performance, while Sterling, Franc, and Yen lag. The Dollar sits on firmer ground but has yet to generate strong directional momentum. Fed is widely expected to leave interest rates unchanged at 4.25–4.50%, a decision already fully priced in by markets. Attention will center on the updated Summary of Economic Projections and the new dot plot. In March, the median forecast pointed to two rate cuts in 2025, but that view was narrowly held. A shift in just two members’ projections could tilt the median down to a single cut. Fed Chair Jerome Powell is likely to reiterate the “wait and see” strategy, repeating that policy is appropriately restrictive for now. While markets are leaning toward a rate cut by September, Powell is unlikely to offer strong forward guidance, especially with inflation risks and tariff timelines still unresolved. Recent labor market softness may receive some acknowledgment, but overall, Fed is expected to stick with its existing posture. Meanwhile, global risk sentiment continues to be tested by the increasingly sharp rhetoric between the US and Iran. President Trump called for the “unconditional surrender” of Iranian Supreme Leader Ayatollah Khamenei, warning that he is an “easy target.” In response, Khamenei vowed resistance and warned that a US attack would bring “irreparable damage.” Despite these threats, markets have yet to show panic, with oil and gold prices largely contained..... |
