US Dollar Strengthens Into FOMC on Hawkish Expectations

The US dollar reversed early-week losses and is trading close to its highest levels of the year ahead of Wednesday’s Federal Open Market Committee decision. According to Lee Hardman of MUFG, the greenback’s recovery reflects expectations that the Fed will maintain a hawkish stance.

The dollar index is hovering near YTD peaks, underscoring the market’s anticipation of a policy statement that reinforces the commitment to fight inflation. The FOMC is widely expected to keep rates on hold but could signal a prolonged restrictive posture.

The move erases earlier weakness that emerged at the start of the week, marking a firmer tone across major pairs.