The U.S. dollar index or often called as the DXY hit over the past two days amid market waits ahead of the announcement. That is about the results of the Federal Open Market Committee (FOMC) meeting later tonight. 

When this news was written at the beginning of the European session (May 4), DXY looked sluggish. However, it was still circulating in the range of highs around the level of 103.40s.

The greenback also weakened in all major currency pairs, with the exception of USD/CHF. That pair continued to top two-year highs due to the absence of intervention from the Swiss central bank (SNB).

The FOMC later tonight is likely to announce a rate hike of as much as 50 basis points. They may be also increasing the Federal Funds Rate from 0.5 percent to 1.0 percent. 

The Powell Action is Awaited by Market Participants 

These expectations are already fully taken into account by market participants. That is why; the United States dollar needs another catalyst to maintain bullish momentum.

The market has even taken into account the "Fed rate hike" of 50 basis points for june, July, and September respectively. Therefore, the main spotlight focused on the attitude and statements of Fed Chairman Jerome Powell.

His speech was note in the press conference after the meeting. The question is, will Powell affirm those unusually hawkish market expectations or not? People need to wait that.

Assuming that the Fed doesn't start rethinking the pace of its monetary tightening cycle. Besides that, it seems unlikely, the affirmation of a 'rapid' normalization policy should underpin the short-term U.S. yield curve and the dollar 

America’s ADP Payroll Data will be Highlighted 

A number of other news from the United States also came to the attention of the market later tonight. In particular, ADP Payroll data has the potential to shape market expectations ahead of the publication of Non-farm Payroll data on Friday.

The EUR/USD rate rose in the past two days, but this pair was still depressed on its multi-year record below the 1.0550 threshold. European Commission President Ursula von der Leyen last night informed something. 

She puts forward a proposal for a Russian oil embargo as a part of the latest package of sanctions imposed by Brussels on Moscow. This situation triggers another impact. 

The price of Brent and WTI crude oil jumped for about 3 percent after the news broke. That condition making it an additional burden for the euro for going forward in the market. 

The GBP/USD Exchange Rate Increased Slightly 

The GBP / USD exchange rate experienced a similar movement to its counterpart. It means that this pair is sticking out slightly, but not yet out of the lowest range so far.

The traders and investors are also looking forward to the announcement of the results made by Bank of England (BoE) meeting on Thursday. The time is some hours after the FOMC announcement.

Markets have factored in continued BoE rate hikes. However, some of the latest UK economic data raises concerns that tomorrow's rate hike will be accompanied by a more dovish policy statement.

Some Statements Made by FOMC

The FOMC provides statements on monetary policy an average of 8 times a year, along with interest rate announcements. The determination of interest rates is done by voting.

Besides that, the results of individual voting and comments are contained in the FOMC statement released after the meeting. In addition to This topic, the Statement also contains other policies and forecasts of economic conditions in the future.

Those can affect the central bank policy ahead. At its last meeting on March 16-17, the Fed raised its benchmark interest rate by 0.25% to +0.50%, which is in line with the forecasts.