Dollar Hits One-Month High on Lingering Fed Hike Chances

The US dollar reached a one-month high as traders considered the possibility of a Federal Reserve rate hike. Despite falling oil prices, which provided some relief from inflation concerns and supported the dollar's strength, markets are pricing in a higher chance of a rate increase this week.

A growing number of major brokerages believe there is a real risk of the Fed delivering a rate hike this week, with expectations for a hike of at least 25 basis points pegged at 36.3%, according to CME FedWatch, up from 16% a week ago.

The dollar index edged up 0.03% to 101.55, with the euro down 0.01% at $1.1366 and sterling eased 0.02% to $1.3284. The BOJ is expected to leave the door open to further hikes to stem the yen's decline, although policymakers will likely stay ambiguous on the pace and timing of the moves.