Dollar Holds Near Two-Week High as Markets Price 92% Odds of Fed Rate Hike

Currency and bond markets were largely in a holding pattern on September 16 as traders awaited the Federal Reserve's interest rate decision, with the US Dollar Index flatlined near 99.60, a two-week high, and Treasury yields little changed. Market pricing pointed to a 92.4% probability that the Fed would raise rates by 25 basis points at its September meeting, keeping risk appetite cautious across major pairs.

The EUR/USD edged marginally higher to near 1.1550 but traded with notable caution, reflecting broader hesitation ahead of the policy announcement. GBP/USD rebounded from a technically significant 0.786 Fibonacci Arc level, though analysts at Societe Generale flagged the 1.3440 to 1.3420 zone as the next key support area to watch should sterling resume its decline toward the 0.618 Arc.

USD/JPY hovered around the pivotal 155.00 level as traders looked ahead not only to the Fed decision but also to an upcoming Bank of Japan policy meeting, making the pair a focal point for potential volatility. Gold held cautiously just below $4,350, staying above the 100-day simple moving average at $4,326.81 as bullish momentum on shorter-term charts remained intact but investors refrained from making large directional bets before the Fed announcement.