Dollar Index Remains Firm Ahead of Key FOMC Decision

The dollar extended its recovery for a third straight session on Tuesday, retracing more than half of the decline from the 102.72 peak to the 101.24 low.

Improving risk sentiment, particularly stabilization in AI-related stocks, along with hawkish remarks from U.S. policymakers and firmer oil prices, have helped underpin the greenback’s latest advance.

Market attention is now firmly focused on Wednesday’s FOMC meeting. While the Federal Reserve is widely expected to leave interest rates unchanged, investors will closely scrutinize policymakers’ guidance on the future path of monetary policy, which is likely to set the tone for the dollar in the near term.

Persistent inflationary pressures and elevated energy prices could encourage Chair Warsh and fellow policymakers to maintain a hawkish stance, providing fresh support for the U.S. currency.

Under such a scenario, the dollar index could challenge its 2026 high at 102.72, with a sustained break above that level reinforcing the broader bullish outlook.

The positive bias is further supported by expectations for a December rate hike and the possibility of additional policy tightening in early 2027, while daily technical indicators continue to point higher.

Conversely, if the Fed reiterates its data-dependent approach and emphasizes the need to monitor incoming economic developments before committing to further tightening, markets may interpret the message as relatively dovish, potentially weighing on the dollar and triggering a renewed pullback.

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