European session review: USD strengthens ahead of the Fed’s policy directive

USD rose against its major rivals in the European session on Wednesday as investors’ attention turned to the outcomes of the U.S. Federal Reserve's policy meeting.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, rose 0.42% to 90.55.

The Fed will announce its decision on monetary policy - the first one this year -  today at 19:00 GMT. Markets expect no changes in the central bank's policy stance, with both interest rates and QE to be kept unchanged. But investors wait for an update on the economic outlook from the Bank's governor Jerome Powell, looking for any shifts in tone on the back of vaccine rollout and larger fiscal stimulus. Economists suggest that more upbeat rhetoric on the economic perspectives may cause speculation about some earlier-than-forecast tapering of the Fed’s asset purchases. Powell is scheduled to begin his press conference at 19:30 GMT.

Market sentiment also continued to be weighed down by uncertainty surrounding President Joe Biden's $1.9 trillion stimulus package and reports that global Covid-19 cases surpassed 100 million.