Dollar Eases Ahead of Fed Decision Amid Oil, Gold Weakness

The US Dollar is trading slightly lower ahead of the Federal Reserve's monetary policy announcement on Wednesday. The Greenback remains close to its recent monthly high, but investors are reducing their exposure in anticipation of the Fed's decision.

Market expectations suggest that the Fed will maintain the fed funds target range at 3.50%, 3.75%, although there is a 40% probability of a 25-basis-point interest rate increase. The US Consumer Confidence data released earlier this week also weighed on demand for the dollar, limiting its gains.

The Euro and Pound Sterling are benefiting from the modest retreat in the US Dollar, with EUR/USD rising around 0.2% to trade near 1.1390. Meanwhile, USD/JPY edges higher toward 163.84, supported by elevated US Treasury yields and expectations of a hawkish Fed stance.

Oil prices are under pressure, with West Texas Intermediate (WTI) tumbling over 3.5% to trade near $79 per barrel. Gold is also declining, down around 1.2% to near $4,027 per troy ounce.