Rising dollar pushes peers down in the Fed’s week.

This week, central banks in the US, EU, Japan, UK, Switzerland, Sweden, Norway, Indonesia, the Philippines, Taiwan, Brazil, South Africa, Turkey, and Hungary have their policy meeting. The dollar rallied to a month-high on Monday as The Fed is still expected to lay the groundwork for tapering at its policy meeting, with Yields on 10-year Treasuries touching a two-month top and the curve flattening ahead of the meeting.

Fed meeting on the agenda

The FOMC meeting on Tuesday and its minutes on Wednesday will be the major market mover this week. Investors will be watching closely for any details about the central bank's plans to reduce its $120 billion monthly emergency stimulus program.

Scaling back economic stimulus on the Fed's timeline is important to markets since it could be seen as the first step in the process of eventually raising rates.

Currently, the market predicts two hikes in 2023 and four in 2024, with the longer-run federal funds rate at 2.125%.

On the basis of the flatter yield curve, there is concern that the Fed may overdo the eventual hike cycle or stick to a cautious approach given the rise in COVID-19 cases and a weak jobs report for August.

USD bulls keep the ground

Following a pullback to the LWMA 34, DXY is approaching its 10-month peak. On Monday morning, the greenback remains anchored above 93 points. A risk-off mood keeps the dollar gauge in the green after posting a two-week uptrend.

Technical indicators on a weekly chart appear to be confirming a bullish move, as momentum is heading up and the moving averages are holding as dynamic support.

Nevertheless, the pre-Fed uncertainty and a bank holiday in China and Japan have hindered the DXY's momentum.

Bullish speculation in the dollar spiked for a fourth week in a row last week and now stands at levels last seen on the verge of the Coronavirus pandemic back in February 2020. Moreover, the net longs/open interest ratio approached 55% for the first time since mid-May 2020, according to CFTC Report for the week ending September 14.

Next events on the calendar

RBA monetary policy meeting minutes is set to release on Tuesday at 4:30 EEST.

Earlier this month The RBA announced that it would hold rates as planned, indicating that the asset purchases may continue for much longer.

This week's US data calendar is light and almost centred around data on housing. Building permits and housing starts data will be released on Tuesday, followed by existing home sales data on Wednesday and new home sales data on Friday.