USD strengthens ahead of FOMC meeting but gains modest so farFX Daily Snapshot

Key arguments

• Hawkish repricing at the short end, triggered by stronger US inflation data, has lifted the dollar index back above its 200-day moving average at around 99.150.
• Despite 22bps of hikes priced for this week's FOMC versus 15bps a week ago, the dollar index has risen only 0.3%, highlighting a surprisingly limited positive impact.
• A decision to leave rates on hold would threaten Fed policy credibility and could trigger a sharp sell-off in the US dollar and long-term US Treasuries.
• Even if the Fed hikes, it may be reluctant to deliver a back-to-back hike at the 28 October meeting just before the 3 November mid-term elections; the next hike may not come until 9 December.

Corresponding source evidence

1. 1 14th September 2026 USD strengthens ahead of FOMC meeting but gains modest so far 14 th September 2026 USD: Fed hike is expected now but US dollar strength has been modest so far The US dollar has strengthened modestly at the start of this week encouraged by building expectations that the Fed will begin tightening monetary policy this week. · September 2026
2. The US dollar has been boosted by the hawkish repricing at the short-end of the US yield curve triggered by stronger US inflation data last week.
3. The 2-year US Treasury yield jumped higher by around 26bps last week as market participants moved to price in a more active Fed tightening cycle in response to upside inflation risks.