USD Broadly Supported as Peace Hopes Lift Sentiment Ahead of FOMC Minutes

Broad market sentiment improved on Wednesday as growing optimism over a potential resolution to the Middle East conflict overshadowed lingering concerns about the Federal Reserve's interest rate trajectory ahead of the FOMC minutes release. Risk appetite surged across forex markets, with safe-haven currencies such as JPY and CHF seeing reduced demand as traders rotated into higher-yielding assets. The improved geopolitical outlook helped stabilize equity markets and reduced volatility in currency pairs, with the US Dollar Index holding firm as traders awaited clarity from the Fed's latest meeting minutes. The FOMC minutes are expected to provide further insight into policymakers' views on inflation persistence and the timing of potential rate adjustments. Traders should monitor whether the peace negotiations produce concrete outcomes, as any setback could quickly reverse the current risk-on positioning. Near-term, the interplay between geopolitical developments and central bank guidance will be the dominant driver across major pairs, with heightened sensitivity to headline risks likely to persist through the week.