• The index trades in a tight range near 103.30 on Wednesday.
• Tuesday’s drop in US CPI gives green light to a Fed’s pause.
• Investors still see the Fed hiking rates in the July 26 event.

The greenback, when tracked by the USD Index (DXY), navigates a very narrow range around the 103.30 region on Wednesday.

USD Index looks at the Fed

The index manages to put some distance from Tuesday’s monthly lows near the 103.00 neighbourhood amidst the dominating pre-Fed cautiousness among market participants midweek.

In the meantime, it is largely anticipated that the Fed will leave the Fed Funds Target Range (FFTR) unchanged at 5.00%-5.25% at its meeting later on Wednesday. However, investors continue to price in the resumption of the hiking cycle in July with another 25 bps rate hike amidst current disinflationary pressures and sticky core inflation.

The release of the weekly Mortgage Applications tracked by MBA will complete the US docket on Wednesday.