US Session – Market Driver: Key Assets React to Stronger USD, Climbing Oil Prices

The US Dollar strengthened on Wednesday after the Federal Reserve decided to keep interest rates unchanged at 3.50%–3.75%. While the move was widely anticipated, the central bank’s hawkish tone and projections of only two rate cuts across 2026 and 2027 gave the currency fresh momentum.


Earlier in the North American session, gold retreated about 2.46% as the stronger dollar weighed on demand, but following the Fed’s announcement, bullion steadied and edged higher to $4,824.70 per ounce, up 0.13% on the day.

The modest rebound highlighted how traders remain cautious, balancing the Fed’s firm stance against lingering inflation risks. Policymakers emphasized that rising energy costs are likely to push inflation higher in the near term, warning that rate cuts will be difficult without clear progress on price stability.

Global markets remain cautious as geopolitical tensions in the Middle East continue to drive energy prices upward. The US Dollar Index climbed above the 100 mark following the Fed’s announcement, while producer price data showed a 3.9% annual increase—higher than expected and excluding the impact of recent energy spikes.


Currency markets reflected the dollar’s strength across the board. EUR/USD slipped toward 1.1480 ahead of the European Central Bank’s policy decision, while GBP/USD retreated to 1.3290 as traders awaited the Bank of England’s announcement. USD/JPY surged to nearly 160, its highest level since mid-2024, with the Bank of Japan set to deliver its rate decision in the Asian session. Meanwhile, USD/CAD advanced to 1.3720 after the Bank of Canada opted to hold rates steady at 2.25%, signaling a cautious stance.


Commodities also reacted to the shifting landscape. West Texas Intermediate (WTI) crude oil rose to $99 per barrel, gaining 4% over two days as Middle East tensions fueled supply concerns. The bullish bias in oil markets has added another layer of complexity to the inflation outlook.


Looking ahead, investors will be watching a packed economic calendar. Thursday brings employment data from Australia and the UK, interest rate decisions from the ECB, BoE, BoJ, and SNB, as well as US jobless claims and manufacturing figures. Friday will feature China’s central bank decision, German producer prices, Canadian retail sales, and further oil market updates.


WTI crude remains a key focus, given its role as a benchmark in global energy markets. Known for its high quality and ease of refining, WTI is sourced in the United States and distributed through the Cushing hub, often referred to as the “Pipeline Crossroads of the World.” Its price is heavily influenced by inventory levels, OPEC decisions, and geopolitical developments, making it a critical driver of inflation and market sentiment worldwide.