Dollar Firms as Fed Hike Odds Rise to 37% and Gold Slides Below $4,400

Currency and commodity markets were pulled in competing directions as traders weighed Federal Reserve policy signals, oil-driven inflation risks, and escalating U.S.-Iran tensions. The dollar edged higher after markets priced a 37% probability of a Fed rate hike in September, even as the broader DXY index remained under pressure from expectations the Fed could pause its tightening cycle. Fed minutes due shortly are the next key catalyst for direction.

Gold slid below $4,400 as the firmer dollar and oil-fueled inflation concerns bolstered the greenback across major pairs. EUR/USD and GBP/USD held near resistance levels, supported by comparatively hawkish stances from the European Central Bank and Bank of England. In Asia, currency markets lacked direction amid the unsettled Fed outlook and geopolitical uncertainty tied to U.S.-Iran tensions.

The Canadian dollar faced a competing push-and-pull between hotter-than-expected domestic inflation, which could support the loonie, and persistent tariff risk weighing against it. In fixed income, Sony Financial Group warned that Japanese government bond yields faced continued upward pressure unless supply-demand dynamics improved and inflation fears eased. Silver bucked the cautious tone, with technical analysis pointing to a bullish cycle shift targeting $67.77 to $68.88 above key support levels.

UK equities were set for a flat open as rising oil prices and inflation jitters offset any positive momentum for FTSE 100 blue-chips.