U.S. Dollar Gains Strength Ahead of Federal Reserve Decision

The U.S. dollar strengthened against its primary rivals during Wednesday's New York trading session, as investors braced for the Federal Reserve's upcoming monetary policy announcement, which is expected shortly.

While most analysts widely anticipate the Fed to maintain current interest rates, market participants are focusing on the accompanying statement and the latest projections from officials, searching for indications regarding the future direction of interest rates.

According to the CME Group’s FedWatch Tool, there is currently a 99.0% probability that the Federal Reserve will keep interest rates unchanged once again.

Projections from the FedWatch Tool also suggest that the Fed is likely to maintain steady rates during its next meeting scheduled for early May. However, the likelihood of a rate cut increases as we move into June and July.

During its most recent meeting in late January, the Federal Reserve opted to leave rates unchanged, following a cumulative reduction of 100 basis points (or 1.0 percentage point) over the course of the previous three meetings, starting with a 50 basis point cut last September.

On Wednesday, the U.S. dollar reached a two-day high of 1.0872 against the euro and a two-week peak of 150.14 against the yen. The currency is expected to encounter resistance around 1.03 against the euro and 151.00 against the yen.

Additionally, the dollar climbed to 0.8809 against the Swiss franc and 1.2954 against the British pound, with potential resistance levels at approximately 0.92 against the franc and 1.24 against the pound.

The greenback also touched 0.6321 against the Australian dollar, 0.5776 against the New Zealand dollar, and 1.4337 against the Canadian dollar, all marking two-day highs. Resistance is expected around 0.61 for the Australian dollar, 0.56 for the New Zealand dollar, and 1.46 for the Canadian dollar.