USD Steady as FOMC, Middle East Tensions Keep Forex Markets Cautious

Major forex pairs traded in tight ranges during European hours as markets adopted a tentative stance ahead of multiple central bank decisions and escalating Middle East geopolitical risks. Oil prices surged amid the US-Iran tensions, though momentum is being tested as the Iraq-Turkey pipeline prepares to resume at 250,000 barrels per day. The Federal Reserve is widely expected to maintain the status quo at its upcoming FOMC meeting, avoiding any hawkish surprises that could unsettle markets. Similarly, the Bank of Canada is projected to hold rates steady given the cautious approach amid regional conflict, while the Bank of Japan is expected to make no changes due to persistently weak inflation progress. Eurozone equities maintained a strong front despite the uncertainty, though traders remain wary of sudden risk-off moves. The Canadian dollar faces particular sensitivity to oil price swings, while the yen could see safe-haven flows if geopolitical tensions escalate further. Traders should monitor headline risks closely, as any deterioration in the Middle East situation could trigger sharp moves across commodity-linked and safe-haven currencies.