Investing.com - The dollar moved lower against the other major currencies on Monday, as investors turned their attention to the outcome of Wednesday’s Federal Reserve policy meeting 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, was down 0.46% at 101.13.
The Fed is widely expected to hike rates for the first time in a year 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.
Higher rates boost the dollar by making the currency more attractive to yield-seeking investors.
The euro pushed higher, with EUR/USD climbing 0.51% to 1.0608 amid concerns that the Fed will remain cautious on the outlook for policy tightening in 2017.
The dollar pared back gains against the yen, with USD/JPY at 115.44, after touching highs of 116.12 earlier, the most since February 8.
The pound gained ground, with GBP/USD rising 0.62% to 115.83 as investors looked ahead to a raft of economic reports out of the U.K. and the Bank of England’s policy meeting later in the week.
Meanwhile, the Canadian dollar hit seven-week highs against the greenback as a rally in oil prices boosted the commodity related currency.
USD/CAD was down 0.43% at 1.3130 after falling as low as 1.3108 earlier, the weakest level since October 20.