Fed Raises Interest Rates for First Time in Three Years Amid Dollar Rebound

The US Federal Reserve raised its benchmark interest rate by 25 basis points at its September meeting on Wednesday, marking the Fed's first interest rate hike in three years. The decision comes as traders assess the impact of the move on the US Dollar Index (DXY), which has reclaimed the 100.00 psychological level.

According to analysts at Danske Bank, the updated Fed projections show a strong majority of officials think another hike is possible later this year, with around a 49.8% chance of a Fed hike in October priced in by money markets.

The European Central Bank (ECB) delivered a 25 bps rate hike last week and reiterated it won't pre-commit to further steps after raising rates for a second time since the Iran war started.