The dollar was pinned near five-week lows on Wednesday ahead of the conclusion of the U.S. Federal Reserve's policy meeting, with investors awaiting clarity on the path the central bank is likely to take in the wake of global banking turmoil.
Investor attention is zeroed in on whether the Fed will stick to its hawkish path to fight sticky inflation or pause interest rate hikes given recent trouble among banks which has included bankruptcy and last-minute rescues.
Markets are now pricing in about a 14% chance of the Fed not increasing rates, with a roughly 86% chance of a 25 basis point hike, showed the CME FedWatch tool. Just a month earlier, the market was pricing in a 24% chance of a 50 basis point hike. "It might be early days, but the price action over the past 48 hours is certainly signalling a change in mood by investors."
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