With only a few hours left until the results of the FOMC meeting are announced, currency markets continue to show caution in the European session.
The main focus is of course US dollar trading which is seen as 'not daring' to go anywhere ahead of the meeting.
This was reflected in the dollar index trading which continued to hover around a 5-week low against a basket of major currencies at 103.12.
Even so, investors are still preparing for possible more aggressive movements of the greenback ahead of the next New York session.
Looking at broader currency movements, the pound sterling surged to a new 7-week high against the US dollar after being supported by a surprise UK inflation reading.
After falling for 3 consecutive months, UK annual inflation unexpectedly rose to 10.4% in February from 10.1% recorded in January.
This made investors put their expectations for continued interest rate hikes by the Bank of England (BOE).
Meanwhile, the euro continued to show strength on the back of a weaker US dollar trading stronger at a 5-week high against the greenback.
On the other hand, the Aussie and New Zealand dollars rose slightly, taking advantage of the gloomy US dollar trading.
Markets now widely expect the Fed to raise interest rates by 25 basis points, yet at the same time investors remain on alert for any more surprising possibilities.
Take care of your risk, and happy Ramadan al-Mubarak!
