Dollar Eases Ahead of FOMC Meeting as Rate Hike Risk Falls

The US Dollar is narrowly mixed to softer ahead of the Federal Open Market Committee (FOMC) meeting, according to Scotiabank strategists Shaun Osborne and Eric Theoret. They note that swaps are pricing a modest chance of a hike, but they see this risk as much lower than usual.

The analysts argue that policy is unlikely to change until the Federal Reserve's operating reviews are complete. In their view, even if the Fed holds interest rates steady, a lack of guidance would likely lead to Dollar weakness.

Osborne and Theoret point out that US Dollar Index (DXY) losses below 101.10 intraday would signal further short-term losses for the Dollar. They see this as a key indicator of potential Dollar weakness in the near term.