Dollar holds near two-week high as traders see 78 percent odds of December Fed hike

The dollar index held at 102.32 on Wednesday, close to a two-week high, as investors waited on the Federal Reserve's rate decision with a December increase still very much in play. Traders were pricing a 78 percent probability of a rise of at least 25 basis points in December, according to CME Group's FedWatch tool, even as the market broadly expects the Fed to stand pat at this meeting.

Several policymakers have signalled they want more evidence on the persistence of inflationary pressures before moving. The euro was little changed at $1.1126, just above a low earlier this month that was its weakest since May 2025, while the dollar held steady at 157.89 yen and the yield on the benchmark 10-year Treasury note edged up 1 basis point to 5 percent.

Sterling slipped 0.1 percent to $1.328 and shed around 0.2 percent against the euro, though it stayed near the 17-month high against the single currency touched in the previous session. Investors were focused on Finance Minister John Healey's budget statement at 12:30 GMT, with analysts expecting possible tax rises aimed at banks, gambling companies and online marketplaces, and watching whether the government leans too heavily on borrowing.

The New Zealand dollar fell as much as 1.3 percent to $0.5609 after the Reserve Bank of New Zealand held its benchmark rate at 2.75 percent, wrong-footing the majority of economists who had expected an increase. The decision added to a week of central bank meetings in which policymakers are weighing inflation risks against growth and financial stability.

In crypto markets, Bitcoin rose 0.7 percent to $81,292.46 and Ether gained 0.9 percent to $2,362.49, according to Token Times.