The dollar rose moderately on Tuesday. Small lot speculative buying was evident throughout the session. Heavier selling pressure was seen in the Euro FX with lighter pressure in the British pound.
All eyes are focused on Washington today and tomorrow as the Fed conducts a two day meeting on policy. It is a forgone conclusion that short term interest rates will be raised by a quarter percent in the announcement Wednesday. This rise has been signaled for weeks now and investors fully expect the announcement.
The short term market reaction to the rise is still unknown. However, longer term higher U.S. interest rates will draw buying interest into the dollar. The bond market has already pushed longer term rates higher and the feeling is that the Fed is now playing catch-up to market rates.