Oil Rallies on Iran Strait of Hormuz Tensions; USD Eyes FOMC Decision

Crude oil prices extended their climb during the European session as geopolitical tensions in the Middle East intensified following reports that Iran has rejected an Oman-brokered proposal regarding the Strait of Hormuz, a critical chokepoint for global oil shipments. Adding to supply disruption concerns, Yemen's Houthi forces are reportedly considering imposing fees on vessels transiting the Red Sea, further threatening maritime trade routes. These developments are bolstering commodity-linked currencies such as CAD and NOK while weighing on risk sentiment broadly. The USD remains in focus as markets position ahead of the upcoming FOMC meeting, where traders will scrutinize the Federal Reserve's policy guidance for signals on the rate trajectory. Rising oil prices typically exert upward pressure on USD/CAD sellers as the Canadian dollar benefits from energy exports, while safe-haven flows could support USD/JPY and USD/CHF. Traders should monitor Strait of Hormuz developments closely, as any escalation could trigger significant volatility across energy-sensitive forex pairs and broader risk assets heading into the Fed decision.