The EUR/USD pair has bounced up from weekly lows at 1.1445 on Thursday and is trading at 1.1475, practically flat on the day, at the moment of writing. Fears of an escalation of the Israel-Iran war into a regional conflict are dampening risk appetite and weighing on the Euro in favor of safe assets such as the US Dollar.

US President Donald Trump stole the Federal Reserve's (Fed) spotlight on Wednesday, leaving the world guessing whether the US may join Israel in its attack on Iran, and a report from Bloomberg, released somewhat later, suggested that US officials might be preparing to enter the war, probably on the weekend.

The US Dollar (USD) is drawing support from investors' risk-off reaction amid growing concerns that the conflict might escalate into a regional war, threatening the Oil supply and adding a new layer of uncertainty in the already strained global growth prospects.

The Federal Reserve left its benchmark interest rate unchanged at the 4.25%-4.50% range after its monetary policy meeting on Wednesday, and maintained the previous projections of 50 basis points (bps) cuts in the second half of the year.

Chairman Jerome Powell, however, curbed investors' enthusiasm, warning that inflation will increase in the coming months as the impact of tariffs starts to filter in. The US Dollar, which had eased after the decision, regained lost ground following Powell's hawkish rhetoric.

Source : Fxstreet