DXY Reaches Two-Week High Ahead of Fed Decision

The US Dollar Index (DXY) has reached a two-week high, trading at around 99.66 on Tuesday as traders await the Federal Reserve's monetary policy decision on Wednesday.

Markets are nearly fully pricing in a 25-basis-point rate hike, with the CME FedWatch Tool placing the probability at 92%.

Strategists at Scotiabank warn that any doubts about follow-through action from the FOMC could still derail the USD, while TD Securities notes that 'a 25bp rate hike almost fully priced-in' could lead to knee-jerk weakness in the dollar.