Investing.com - The dollar pushed higher against the euro and the yen on Tuesday as investors turned their attention to the outcome of the Federal Reserve policy meeting starting later in the day, amid widespread expectations for a rate hike.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, ticked up 0.14% to 101.14.
The Fed is widely expected to hike rates for the first time in a year on at the conclusion of its meeting on Wednesday, with investors pricing in a 100% chance of an increase, according to federal funds futures tracked Investing.com's Fed Rate Monitor Tool.
The U.S. central bank will also announce updated economic forecasts and markets will be watching closely for signals on the outlook for inflation and the expected pace of rate hikes in 2017.
Investors remained wary amid concerns that the Fed could strike a cautious tone on the outlook for policy tightening next year.
Higher rates boost the dollar by making the currency more attractive to yield-seeking investors.
The euro slipped lower, with EUR/USD down 0.15% to 1.0620.
The yen also weakened, with USD/JPY rising 0.28% to 115.33, holding below Monday’s highs of 116.12, the strongest level since February 8.
The pound was little changed against the dollar, with GBP/USD edging up 0.1% to 1.2690 ahead of UK economic data which was expected to show that inflation rose in November.
Meanwhile, the Australian and New Zealand dollars were little changed, with AUD/USD at 0.7485 and NZD/USD at 0.7187.
The Canadian dollar was steady near seven-week highs, with USD/CAD at 1.3131 following a rally in oil prices.
Higher prices for oil, one of Canada's major exports, typically boost the Canadian dollar.