Dollar Holds Steady as Investors Monitor Middle East Tensions and Global Central Bank Decisions

The US dollar remained largely steady on Monday as global investors weighed escalating tensions in the Middle East and awaited critical policy decisions from major central banks, including the US Federal Reserve and the Bank of England.

Amid rising geopolitical uncertainty—particularly concerns surrounding the Israel-Iran conflict—safe-haven demand helped keep the dollar anchored. Investors remained cautious, with risk appetite subdued as they await guidance on interest rate trajectories from upcoming central bank meetings.

The dollar index, which tracks the greenback against a basket of major currencies, held near recent levels. Analysts noted that the stability reflects market participants taking a wait-and-watch approach amid mixed economic signals and growing global uncertainty.

The Federal Reserve is expected to maintain its benchmark interest rate during its June meeting, but traders will focus on the Fed’s updated economic projections and comments from Chair Jerome Powell for clues on the path forward. Meanwhile, the Bank of Japan and the Bank of England are also set to announce their policy decisions later this week, adding to market volatility.

While recent US inflation data came in slightly cooler than expected, investors are still factoring in the possibility of rate cuts later in the year, provided economic conditions remain supportive.

Market analysts believe that unless there is a dramatic escalation in geopolitical tensions or surprise moves by central banks, the dollar is likely to trade within a tight range in the near term.