Daily forex roundup: dollar hits 4-week low despite a hawkish Fed; gold and oil climb

The dollar slipped to a four-week low even as the Federal Reserve held rates steady in a divided, hawkish decision, while gold rebounded and oil prices climbed amidst escalating Middle East tensions.

Fed decision and market reaction

• The dollar suffered its worst day in about four weeks despite a hawkish Fed hold: the Federal Reserve kept interest rates steady, but the vote was divided — three members backed a rate hike — and focus has shifted to a possible September hike. The dollar sold the news anyway, sliding even as the hawkish signal argued the other way.
• The euro initially rose as the dollar fell, but gave back ground to near 1.1450 on its own headwinds, with traders awaiting eurozone and German GDP data.
• Gold rebounded to near $4,100, reversing previous losses, as the hawkish dissent fueled volatility and the dollar fell. Silver also held firm.

Geopolitical risks and currency moves

• Oil prices rose amid escalating Middle East tensions, with the United States confirming attacks against Iran. US President Donald Trump stated the US would "hit Iran hard" and is reportedly considering a two-week campaign of attacks. Separately, Yemen's Houthis are reportedly considering charging fees for ships sailing through the Red Sea.
• The British pound was among the day's strongest majors, with GBP/JPY bulls reclaiming the 218.00 level, though it later eased off its high as focus turned to the BoE. The Japanese yen caught a day of relief (short-covering) after the hawkish hold.
• The New Zealand dollar rebounded after the Fed hold and extended gains as the ANZ Business Outlook Index jumped in July.

Market metrics and key events today

• Our FSI stands at 56 (Neutral), indicating balanced market sentiment. The MRS is at 65, suggesting moderate market readiness for movement, while the CTS remains high at 79.
• Key events today:

- EUR · German Prelim CPI m/m: SCHEDULED (forecast 0.7%, previous -0.3%)

- GBP · Official Bank Rate: SCHEDULED (forecast 3.75%, previous 3.75%), along with the Monetary Policy Summary and MPC Official Bank Rate Votes. BOE Governor Bailey is also due to speak.

- USD · Advance GDP q/q: SCHEDULED (forecast 2.1%, previous 2.0%) and Core PCE Price Index m/m: SCHEDULED (forecast 0.2%, previous 0.3%).

- JPY · Tokyo Core CPI y/y: SCHEDULED (forecast 1.8%, previous 1.6%).