Markets risk-off ahead of FOMC minutes; dollar finds haven support

Global forex markets are experiencing risk-off sentiment as traders position defensively ahead of Wednesday's FOMC minutes release. The anxiety surrounding Federal Reserve monetary policy has strengthened safe-haven currencies, particularly the US dollar and Japanese yen, against risk-sensitive pairs. Market participants are scrutinizing Fed communications for any hints about the pace and timing of future rate decisions, especially given recent mixed economic signals. The cautious mood has pressured commodity currencies and emerging market forex pairs, with traders reducing exposure before the key event risk. Technical indicators suggest increased volatility expectations, with implied volatility rising across major currency pairs. The FOMC minutes could provide crucial insights into the central bank's assessment of inflation persistence and labor market conditions. Traders should prepare for potential sharp movements post-release, particularly if the minutes reveal unexpected hawkish or dovish tilts in committee discussions.