The US dollar index fell slightly to around 98.50, awaiting the Federal Reserve monetary policy report.

According to Gate News bot, FXStreet reports that the US Dollar Index (DXY), which measures the value of the dollar against six major currencies, has fallen for the second consecutive day, trading at around 98.70 at the time of this writing. Traders may follow the monetary policy report that the Federal Reserve is scheduled to release on Friday. The Federal Reserve Committee will submit a report to Congress that includes discussions on "the implementation of monetary policy, economic development, and future prospects."

Concerns about the U.S. potentially getting involved in air combat with Iran have intensified, leading to increased demand for safe-haven assets, and the dollar may regain its upward momentum. According to The New York Times, senior U.S. intelligence officials believe that although Iran has a substantial stockpile of enriched uranium necessary to manufacture nuclear weapons, the country has not yet decided whether to pursue nuclear armament.

However, the report also points out that if the U.S. military attacks Iran's uranium enrichment facility at Fordo, or if Israel kills Iran's Supreme Leader Ayatollah Khamenei, Iran may turn to manufacturing nuclear weapons. The chairman of the U.S. Senate Intelligence Committee noted that President Trump will give Iran one last chance to reach an agreement to terminate its nuclear program. Trump may delay the final decision on launching an attack by up to two weeks.

Fed Chair Jerome Powell's cautious comments at the post-meeting press conference on Wednesday supported the dollar. Powell noted that inflation is still slightly above target and could rise in the future. He stressed the importance of the current policy stance, which puts the Fed in a good position. He warned that continued policy uncertainty would keep interest rates unchanged for the Fed.

The Federal Reserve announced in June to maintain the interest rate at 4.5%, which is in line with market expectations. However, the Federal Open Market Committee (FOMC) still expects that by the end of 2025, the Federal Reserve will cut rates by about 50 basis points.