US Dollar Index moves above 99.00 due to Fed Rate hold, escalating Middle-East tensions

• US Dollar Index appreciates amid the ongoing Israel-Iran conflict.
• The Federal Reserve announced to keep the policy rate unchanged at the 4.25%-4.50% range in June.
• Fed Chair Powell signaled that inflation could rise in the upcoming months.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is extending its gains for the third successive session and trading higher at around 99.10 during the Asian hours on Thursday. The Greenback continues to gain ground following the US Federal Reserve's (Fed) decision to keep the policy rate unchanged at the 4.25%-4.50% range at its June meeting on Wednesday, as widely expected. The Federal Open Market Committee (FOMC) still sees around 50 basis points of interest rate cuts through the end of 2025.

Fed Chair Jerome Powell signaled, in a post-meeting press conference, that inflation remains somewhat above goal and could rise in the future, citing the impact of US President Donald Trump's tariffs. Powell supported the current policy stance that leaves the central bank well-positioned. He warned that ongoing policy uncertainty will keep the Fed in a rate-hold stance, and any rate cuts will be contingent on further improvement in labor and inflation data.

The US Dollar also draws support from heightened safe-haven demand amid ongoing Middle East tensions. Bloomberg, citing unnamed sources, reported that "US officials prepare for possible Iran strike in coming days." "The US plans for any Iran attack continue to evolve." Moreover, the Wall Street Journal, referencing individuals familiar with discussions, stated that US President Trump said late Tuesday that he approved of attack plans for Iran, but held it to see if Tehran would abandon its nuclear program.

President Trump criticized Iran "made a mistake", responding to the Supreme Leader Ayatollah Ali Khamenei's declaration that "the Iranian nation will not surrender" and warned of "irreparable damage" if the United States (US) directly joins the Israel-Iran conflict.