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TD Securities strategists Oscar Munoz and Eli Nir suggest the Federal Reserve will maintain a cautious stance in the near term. They highlight elevated uncertainty due to the Iran conflict and mixed U.S. labor market data as key factors delaying rate cuts. The analysts emphasize that the Fed will prioritize data-driven decisions over preemptive actions, reflecting a balanced approach to economic stability. This outlook impacts forex markets, particularly the U.S. dollar, which could remain resilient if the Fed holds rates. Traders should monitor upcoming labor reports and geopolitical developments in the Middle East for potential volatility. A prolonged pause in rate cuts might also influence global capital flows and investor sentiment toward risk assets. For MENA investors, the Fed's policy trajectory affects Gulf markets through dollar-linked assets and trade dynamics. Key risks include renewed tensions in the Iran-U.S. standoff and softening employment trends in the U.S. Watch for the Fed's next policy meeting in June and evolving inflation data to gauge future direction.
