2026.07.3001:08:10UTC+00Dollar Holds Drop After Fed Decision

The dollar index hovered just below 101 on Thursday, stabilizing after a sharp drop in the previous session. The move followed the Federal Reserve’s decision to leave interest rates unchanged, even as inflation risks intensified amid renewed conflict in the Middle East.

Three FOMC members dissented in favor of a rate increase, underscoring divisions within the committee. Chair Kevin Warsh emphasized that holding rates steady should not be interpreted as policy inertia, reiterating that monetary policy will remain data-dependent and that markets should expect decisions to reflect incoming economic information.

In the Middle East, the US was reportedly conducting new air strikes on Iran in response to attacks on American forces in the region. At the same time, diplomatic efforts appeared stalled, with both sides unable to reach a potential agreement as Tehran insisted on retaining control over the Strait of Hormuz. The impasse has kept markets on edge, heightening concerns about inflation and complicating the outlook for interest rates.

Elsewhere, the Bank of England and the Bank of Japan are also widely expected to leave interest rates unchanged this week.