Investing.com – The dollar fell against a basket of major currencies as traders appeared to take profits on recent gains ahead of a widely expected interest rate hike on Wednesday.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.26% to 89.78.
The Federal Reserve Open Market Committee (FOMC) meeting is slated to reveal its decision on interest rate Wednesday at 2 p.m. ET, with many expecting the central bank to raise rates by 0.25% to a 1.50% to 1.75% range.
The Summary of Economic Projections on inflation, unemployment and economic growth (GDP) will also accompany the release of the FOMC policy decision.
Market focus is likely to be on the “dot plot,” which shows where each FOMC member in the meeting thinks the interest rates are heading at the end of the year for the next few years and in the longer run.
Following the Fed’s somewhat hawkish turn in sentiment on monetary policy, some market participants expect the FOMC to up its rate-hike projection for 2018, to four rate hikes from three rate hikes. Fed chair Jerome Powell's press conference, which follows the monetary policy statement, is also expected to garner attention for clues on whether the leader of Fed continues to hold an optimistic view on inflation and economic growth.
Focus on the upcoming Federal Reserve meeting overshadowed positive economic data pointing to a rebound in U.S. housing market activity.
The Commerce Department said existing home sales increased 3% in February to a seasonally adjusted annual rate of 5.54 million units. Economists were expecting a 0.5% increase to 5.41 million units.
BOT Mitsubishi said the trend of existing home sales has been volatile in last six months but activity in February "ended up on the high side this month of the recent range."
GBP/USD rose 0.51% to $1.4070 ahead of the Bank of England monetary policy update due Thursday.
EUR/USD rose 0.17% to $1.2261, while the USD/CAD fell 0.81% to C$1.2966 as a sharp uptick in oil prices continued to support the oil-price sensitive loonie.
USD/JPY fell 0.21% to Y106.32.