28.07.202601:04:50UTC+00Dollar Holds Firm Ahead of Fed Meeting

The dollar index hovered around 101.5 on Tuesday, consolidating the previous session’s gains as investors awaited the Federal Reserve’s policy decision. Markets were pricing in a little over a one-in-three chance of a rate hike—an unusually high level of uncertainty this close to a Fed meeting by the standards of recent years.

Citadel Securities said it expects the Fed to raise rates this week to bolster Chairman Kevin Warsh’s inflation-fighting credibility, after repeated pledges to restore price stability. Futures markets currently imply about a 56% probability of another Fed rate hike in September.

The dollar also held firm after President Donald Trump said the United States was engaged in “good talks” with Iran aimed at ending the Middle East conflict, a development that weighed on oil prices and helped ease concerns about inflation and the prospect of tighter monetary policy.