Dollar index keeps firm tone ahead on FOMC meeting

The dollar extends recovery leg into third consecutive day, retracing over 50% of 102.72/101.24 pullback on Tuesday.

Calmer stock markets, particularly stabilizing sentiment in AI related sector, hawkish signals from the US policymakers and higher oil prices, contributed to dollar’s latest advance.

All eyes are on Wednesday’s FOMC meeting, with wide expectations for keeping rates on hold this time and focus on Fed’s comments on policy action in coming months that would define dollar’s near-term direction.

Elevated inflation and rising oil prices could contribute to hawkish stance of Chair Warsh and his team that would provide fresh support to the US currency.

In such scenario, dollar would look for retest of 2026 peak (102.72) and signal bullish continuation on firm break.

The notion is supported by expectations for December rate hike and keeping on track for further tightening in early 2027, as well as bullish daily technical studies.

On the other hand, more common Fed’s mantra of closely watching the movements and further action depending on the latest economic data, would be seen as more dovish stance and probably add pressure on greenback.

Res: 102.16; 102.37; 102.72; 103.00
Sup: 101.73; 101.59; 101.24; 101.00