Fed Decision and Big Tech Earnings to Drive Market Outlook

The EUR/USD pair edged lower below the 1.1700 level early on Wednesday, with the US Dollar gaining support from ongoing geopolitical uncertainty and cautious positioning ahead of the Federal Reserve’s policy announcement.

Investors continued to favor the Dollar’s safe-haven appeal amid unresolved tensions in the Middle East. Reports indicated that discussions are ongoing regarding a possible ceasefire, though no breakthrough has been confirmed.

According to recent media reports, Iran has requested the United States ease its naval blockade of the Strait of Hormuz as part of negotiations aimed at ending the two-month conflict. However, uncertainty remains elevated, with Tehran maintaining that the strategic shipping route will stay closed while restrictions remain in place.

Market participants are now focused on the Federal Reserve’s interest rate decision later on Wednesday. The US central bank is widely expected to leave rates unchanged, keeping the federal funds target range at 3.50% to 3.75%, which would mark a third consecutive pause.

Attention will also center on Fed Chair Jerome Powell’s post-meeting remarks, as traders look for guidance on how policymakers view inflation, growth risks, and the future path of interest rates.

Looking ahead, focus will shift to Thursday’s European Central Bank policy meeting. The ECB is expected to maintain current rates, though markets anticipate a relatively hawkish tone as officials weigh the possibility of future tightening.

Gold prices remained range-bound near the $4,600 level during Wednesday’s Asian session, as investors refrained from taking strong positions ahead of the Federal Reserve’s closely watched policy announcement later in the day.

The precious metal struggled to build upward momentum, with traders focusing on the Federal Open Market Committee (FOMC) decision and subsequent comments from Federal Reserve Chair Jerome Powell. Markets will closely analyze Powell’s remarks for signals on the future direction of US monetary policy.

Any shift in the Fed’s outlook could significantly influence the US Dollar and, in turn, the near-term trajectory of gold, which typically moves inversely to the greenback and remains sensitive to interest rate expectations.

At the same time, lingering geopolitical uncertainty surrounding stalled US-Iran peace negotiations continued to support the Dollar’s safe-haven appeal, limiting gains for bullion. Gold remained close to a three-week low reached on Tuesday.

Hopes for diplomatic progress reportedly weakened after US President Donald Trump canceled a planned visit by his special envoy to Pakistan over the weekend. Additional reports suggested dissatisfaction in Washington with Iran’s latest proposal concerning the conflict and the reopening of the Strait of Hormuz.

Meanwhile, shipping activity through the key maritime route has declined sharply amid Iranian movement restrictions and a US naval blockade of Iranian ports. The disruption has helped keep crude oil prices elevated, renewing concerns over global inflation pressures.

Oil prices moved higher on Wednesday, extending recent gains after reports indicated the United States may continue its blockade of Iranian ports, raising fears of prolonged supply disruptions in the Middle East.

According to media reports, US President Donald Trump has asked advisers to prepare for an extended strategy aimed at maintaining pressure on Iran’s economy and limiting its oil exports by restricting maritime access to its ports. The development added fresh support to crude markets, which have already been climbing amid ongoing tensions in the region.

Although a ceasefire is in place in the US-Israeli conflict involving Iran, negotiations toward a permanent resolution remain stalled. Iran continues to restrict shipping through the Strait of Hormuz, a strategic route responsible for roughly 20% of global oil and liquefied natural gas flows, while the US blockade on Iranian ports remains active..

Meanwhile, tightening global supply conditions were reinforced by reports that US crude inventories declined for a second consecutive week. Market sources citing American Petroleum Institute data said US crude stockpiles fell by 1.79 million barrels in the week ended April 24. Gasoline inventories dropped by 8.47 million barrels, while distillate stocks declined by 2.60 million barrels. The latest inventory figures added to bullish sentiment, signaling stronger demand and reduced available supply in the world’s largest oil consumer.

US stock index futures moved modestly higher on Tuesday evening following a weaker Wall Street session, as investors positioned for a crucial round of earnings from major technology companies and the Federal Reserve’s latest policy announcement. During Tuesday’s regular session, US equities closed lower, with technology stocks leading the decline.

Investor sentiment weakened after reports raised fresh concerns over artificial intelligence demand. According to media coverage, OpenAI reportedly fell short of internal revenue and user growth targets, prompting questions over whether the rapid pace of spending on AI infrastructure and data centers can be sustained. The weakness was most visible in semiconductor and AI-related shares, with major chipmakers such as Nvidia, Advanced Micro Devices, and Broadcom coming under pressure.

Investors are now turning their attention to earnings results from the so-called “Magnificent Seven” technology giants, which represent a significant share of overall US market capitalization.

Microsoft, Meta Platforms, Amazon, and Alphabet are scheduled to report results after Wednesday’s closing bell, while Apple is expected later in the week.

Markets will closely examine whether these companies can continue to justify aggressive AI-related capital spending, particularly after recent volatility across semiconductor shares and the broader technology sector.

Attention is also centered on the Federal Reserve, which began its two-day policy meeting on Tuesday. The US central bank is widely expected to leave interest rates unchanged. However, investors will be closely watching remarks from Fed Chair Jerome Powell for any signals on the outlook for inflation, economic growth, and the potential impact of higher oil prices stemming from Middle East tensions.