Forex Today: Attention shifts away from geopolitics to Fed

Here is what you need to know on Wednesday, June 18:

Following Tuesday's volatile action, financial markets stay relatively calm early Wednesday as investors await the Federal Reserve's (Fed) policy announcements. Alongside the policy statement, the US central bank will also release the revised Summary of Economic Projections (SEP). Ahead of this event, the US economic calendar will feature weekly Initial Jobless Claims and Housing Starts data for May.

The US Dollar (USD) benefited from safe haven flows as United States (US) President Donald Trump's comments suggested that the US could get directly involved in the Israel-Iran conflict. "We now have complete and total control of the skies over Iran," Trump said and added that Ayatollah Ali Khamenei is "an easy target." The USD Index rose 0.7% on Tuesday and Wall Street's main indexes lost between 0.7% and 1% on the day. Early Wednesday, the USD Index stays in negative territory at around 98.50 and US stock index futures trade marginally higher.

The Fed is widely expected to leave the policy rate unchanged at the range of 4.25%-4.5%. Interest rate, inflation and growth projections in the SEP could trigger a market reaction. Later in the session, Fed Chairman Jerome Powell deliver the policy statement and respond to questions from the press.

The UK's Office for National Statistics reported early Thursday that annual inflation in the UK, as measured by the change in the Consumer Price Index (CPI), edged lower to 3.4% in May from 3.5% in April, as expected. On a monthly basis, the CPI rose 0.2% following the 1.2% increase recorded in the previous month. GBP/USD showed no immediate reaction to these figures and was last seen trading marginally higher on the day slightly above 1.3450. The Bank of England will release its interest rate decision on Thursday.

EUR/USD stages a rebound and holds steady above 1.1500 after losing more than 0.5% on Tuesday. Later in the session, several European Central Bank (ECB) policymakers will be delivering speeches.

Gold closed the day flat on Tuesday after failing to clear $3,400. Early Wednesday, XAU/USD moves sideways slightly above $3,380.

Oil prices shot higher in the second half of the day on Tuesday, with the barrel of West Texas Intermediate (WTI) posting its highest settlement since January above $73.50. WTI corrects lower early Wednesday and trades below $73.

The data from Japan showed in the early Asian session that Machine Orders declined by 9.1% on a monthly basis in April. After closing the previous three trading days in positive territory, USD/JPY edges lower and trades at around 145.00 in the European session on Wednesday.