US Dollar Maintains Strength Ahead of FOMC Decision - Forex News by FX Leaders

US Dollar Maintains Strength Ahead of FOMC Decision

Posted Wednesday, March 17, 2021 by
Arslan Butt • 1 min read

Early on Wednesday, the US dollar is trading strong against its peers ahead of the monetary policy decision by the Fed due later in the day, which could reveal the central bank’s future plans. At the time of writing, the US dollar index DXY is trading around 91.95.

While the Fed isn’t expected to hike interest rates or tighten its monetary policy in the latest meeting, traders will keep an eye out for revised growth projections put out by the central bank today. With the COVID-19 vaccine distribution progressing at a rapid pace across the country and President Biden’s latest relief package being rolled out, expectations are for the US economy to recover at a faster than expected pace this year.

There is also considerable interest to see if the Fed will react to the recent volatility in the bond markets that has sent US Treasury yields to the highest levels seen in more than year. Although Fed officials, including Chairman Jerome Powell, have played down the effect of rising treasury yields, any comments about inflation concerns can also cause moves in the US dollar today.

For now, higher US Treasury yields have driven bullishness in the US dollar index for the past three consecutive sessions. The greenback has also strengthened against the Euro over concerns about European countries halting the use of AstraZeneca’s COVID-19 vaccine, which could potentially impede progress towards economic recovery.

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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