Forex Today: No signs of a US-Iran deal, Fed rate decision coming up

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Swiss Franc.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.08%	0.05%	0.06%	0.00%	-0.45%	0.00%	0.26%
EUR	0.08%		0.16%	0.07%	0.11%	-0.35%	0.11%	0.37%
GBP	-0.05%	-0.16%		-0.04%	-0.03%	-0.50%	-0.05%	0.21%
JPY	-0.06%	-0.07%	0.04%		-0.00%	-0.48%	0.06%	0.32%
CAD	-0.00%	-0.11%	0.03%	0.00%		-0.41%	0.06%	0.26%
AUD	0.45%	0.35%	0.50%	0.48%	0.41%		0.46%	0.71%
NZD	-0.00%	-0.11%	0.05%	-0.06%	-0.06%	-0.46%		0.26%
CHF	-0.26%	-0.37%	-0.21%	-0.32%	-0.26%	-0.71%	-0.26%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

The US Dollar (USD) managed to stay resilient against its peers on Tuesday as market participants adopted a cautious tone amid growing concerns over rising crude Oil prices feeding into global inflation. In a post published on Truth Social, US President Donald Trump said that Iran is in a "state of collapse" and that they want the US to open the Strait of Hormuz as soon as possible. Later in the day, the Wall Street Journal reported that President Trump instructed aides to prepare for an extended blockade of Iranian ports.

After rising nearly 3% on Tuesday, the barrel of West Texas Intermediate (WTI) continues to push higher and was last seen trading near $98.20, up about 0.7% on the day. Meanwhile, the United Arab Emirates (UAE) announced on Tuesday that it has quit OPEC. The USD Index clings to modest gains near 98.70, and US stock index futures trade marginally higher. After the closing bell, Alphabet, Amazon, Meta and Microsoft will deliver their latest earnings reports.

The Fed is widely anticipated to leave monetary policy settings unchanged following the April policy meeting, which is likely to be Jerome Powell's last as Chair. Comments from Powell on the inflation outlook will be watched closely by investors.

USD/CAD rose about 0.4% on Tuesday and entered a consolidation phase near 1.3700 midweek. The BoC is forecast to leave the policy rate unchanged at 2.25%.

EUR/USD continues move sideways at around 1.1700 in the European morning on Wednesday. The European Central Bank (ECB) will announce monetary policy decisions on Thursday.

GBP/USD struggles to gather recovery momentum and fluctuates near 1.3500 after posting marginal losses on Tuesday.

USD/JPY stays quiet and remains stuck in a tight band slightly above 159.50 early Wednesday.

AUD/USD comes under modest bearish pressure and declines toward 0.7150 on Wednesday. The data from Australia showed that annual inflation, as measured by the change in the Consumer Price Index (CPI), rose to 4.6% in March from 3.7% in February. This print came in slightly below the market expectation of 4.7%.

Gold (XAU/USD) lost nearly 2% and touched its lowest level in three weeks below $4,560. XAU/USD finds it difficult to stage a rebound early Wednesday and trades near $4,570.

Fed FAQs

What does the Federal Reserve do, how does it impact the US Dollar?

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

How often does the Fed hold monetary policy meetings?

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

What is Quantitative Easing (QE) and how does it impact USD?

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

What is Quantitative Tightening (QT) and how does it impact the US Dollar?

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.