USD gains as Middle East tensions ease; Fed decision looms

Risk sentiment improved across global markets as tensions between Israel and Iran showed signs of easing, though Asian and European equities remained in negative territory. The US Dollar Index strengthened moderately as traders reduced safe-haven positions ahead of tomorrow's critical Federal Reserve rate decision. WTI crude oil spiked initially on geopolitical concerns but later pared gains as diplomatic channels remained open. Gold prices retreated from recent highs, reflecting reduced demand for traditional safe assets. Market participants are now squarely focused on the Fed's policy announcement, with futures pricing in a 65% probability of a rate hold. Any hawkish surprises could trigger significant dollar strength, while dovish commentary might pressure the greenback. Currency volatility remains elevated with implied volatilities rising across major pairs as traders hedge positions before the high-impact event.