Dollar steady ahead of Fed decision; focus on UK budget

The US dollar maintained its gains on Wednesday as it neared a two-week peak prior to the Federal Reserve's rate decision, while the British pound came under scrutiny ahead of the Andy Burnham government's inaugural budget. Traders largely anticipate no change in Fed policy following multiple indications from recent Fed officials to wait and observe further evidence of persistent price pressures.

However, there is a 77% probability that the central bank might raise interest rates by at least 25 basis points in December, according to the CME Group's FedWatch tool.

The euro remained flat at $1.1126, slightly below the May 2025 low it had hit earlier that month, while against the Japanese yen, the dollar experienced a marginal decline to 157.83 yen. Derek Halpenny, head of research at MUFG, noted that a hold in the dollar could be accompanied by a statement akin to the September FOMC hike, highlighting the economy's resilience and signaling a potential December rate increase.

The dollar index, which gauges the greenback's strength against six other currencies, was trading at a two-week high of 102.39, with the US 10-year Treasury note yield up 1.2 basis points to 5.01%.