Dollar Surges to Two-Week High Ahead of Fed Rate Decision

The US dollar strengthened to its highest level in two weeks ahead of the Federal Reserve's interest rate decision, as market participants expect a widely anticipated rate hike. The dollar index rose 0.3% to 99.66, its highest since September 1.

According to the CME FedWatch tool, there is a 94.5% chance of the Federal Open Market Committee announcing a 25 basis point rate hike on Wednesday. Higher borrowing costs tend to strengthen the dollar.

The rise in rate hike expectations has been driven by inflationary concerns from spiking oil prices, recent US labor market and inflation data, and hawkish commentary from Fed policymakers.