Forex Today: Fed decision expected to hold no surprises

Two-week highs mark the latest advance in the US Dollar (USD). Building on Monday’s optimism, the currency has gained ground as US Treasury yields remain mixed and global markets maintain a cautious stance ahead of the Fed.

Having broken above the key 102.00 hurdle, the US Dollar Index (DXY) has extended its gains to fresh two-week highs. Attention now turns to the FOMC meeting, followed by Chair Warsh’s customary press conference. On the data calendar, the regular MBA Mortgage Applications release precedes the advance Goods Trade Balance figures, Wholesale Inventories and the EIA’s weekly US crude oil stockpiles report.

Renewed selling has pushed EUR/USD towards two-week lows around 1.1130. Germany’s domestic calendar contains just one release: the GfK Consumer Confidence gauge.

A third consecutive day of declines has taken GBP/USD close to the key 1.3300 area, marking five-day lows. In the UK, the Autumn Budget will dominate the agenda.

USD/JPY has reached three-day highs near the 15800 barrier following another strong advance. Japan’s next scheduled releases are the regular weekly Foreign Bond Investment figures and the Consumer Confidence reading, both due on 29 October.

Fresh five-week highs above the key 0.7000 level have put AUD/USD ahead of its risk-sensitive peers. Australia’s September inflation figures will be the principal release on the domestic calendar.

With traders still assessing hopes for a diplomatic resolution to the US-Iran-Hormuz conflict, front-month WTI futures (December contract) have extended Monday’s pullback. Further selling pressure has brought the $99.00-per-barrel level into focus.

Extending Monday’s rise, Gold has gained substantial momentum to reach three-day highs further above the key $4,000-per-troy-ounce level. Lower crude oil prices and mixed US Treasury yields appear to have provided some support for the precious metal on Tuesday.