The dollar index has gained for a third consecutive day ahead of Wednesday's Fed meeting. A hawkish message could put the 2026 peak of 102.72 back in play, while a more cautious tone could weigh on the greenback.
The dollar extended its recovery into a third consecutive day on Tuesday, retracing over 50% of the 102.72/101.24 pullback. Calmer stock markets, stabilizing sentiment in AI-related stocks, hawkish signals from US policymakers and higher oil prices all contributed to the advance.
Traders now look to Wednesday's FOMC meeting. Wide expectations call for the Fed to keep rates on hold, so the Fed's comments on policy action in the coming months should define the dollar's near-term direction.
Elevated inflation and rising oil prices could push Chair Warsh and his team toward a hawkish stance. In that scenario, the dollar would look to retest the 2026 peak at 102.72 and signal bullish continuation on a firm break. Expectations for a December rate hike, further tightening in early 2027 and bullish daily technical studies support that view.
However, the Fed could instead repeat its more common line of closely watching the movements and basing further action on the latest economic data. That message would be seen as more dovish and would probably add pressure on the greenback.
The source lists resistance at 102.16, 102.37, 102.72 and 103.00, with support at 101.73, 101.59, 101.24 and 101.00.
Source: ActionForex
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