The Fed is about to announce a decision on the rate, and the closer the outcome, the more difficult it is for the dollar. The US currency stopped moving towards the target three-digit value at around 100.00 and entered into a drift. In theory, the current movement should be nothing more than a correction, it was permissible to reduce the dollar index to 98.70, but the indicator increased the fall. Breaking through the bar at 98.50 is under threat, if the quote settles below this level, a correction to the area of 97.70 will be possible.

The overall USD sentiment remains bullish and will remain so as long as the price is above the 200-day SMA at 94.43.

Of course, much will depend on the outcome of today's historic meeting. It's not even about raising the rate, but about the comments of Federal Reserve Chairman Jerome Powell and the point forecasts of the central bank.

It is unlikely that the central bank will decide to increase by more than 25 basis points, this is now the main scenario. On the scatter plot, prices are fully priced in for an additional 90 basis points of tightening throughout the year. If the reality does not go beyond the forecast, then in general the Fed meeting will have a limited impact on the market. The presence of surprises and surprises will naturally rock the financial markets. However, even against the backdrop of optimism embedded in prices, bullish sentiment in the dollar prevails.

Economists, on the one hand, assess the March meeting differently. On the other hand, the main line can be traced almost identically. Everyone is talking and writing about the beginning of the fight against inflation in the United States, about the mandatory start of rate hikes today, and if it were not for the current Russian-Ukrainian crisis affecting the global economy as a whole, the Fed would be more hawkish.

Rabobank

Economists of this bank believe that at subsequent meetings, "the Committee will continue to tighten by 25 bp for one session. However, by the September meeting, the damage caused by the Ukrainian crisis to the global economy may become a threat to US economic expansion. The doves in the FOMC are likely to stop being tougher enthusiasts by then and require a pause. Powell could signal that the central bank would prefer to assess the effects of the four hikes before resuming tightening."

TDS

"We expect Powell to signal that despite the ongoing conflict between Russia and Ukraine, the Fed is ready to continue with the policy normalization process for the remainder of the year. The market has already priced in enough expectations for a tightening in 2022, but 2023 is still undervalued. Risks are tilting in favor of the dollar, especially in the USD/JPY pair."

RBC Economics

"Low unemployment and rising inflationary pressures offset the onset of geopolitical problems associated with the Ukrainian situation," the analysts said in a statement. According to forecasts of this financial institution, the Fed will raise rates four more times this year by 25 basis points. These increases will bring the target range to 1.25%-1.50% by the end of the year.

ING

"We expect Powell to reaffirm the Fed's commitment to fighting inflation and maintain a hawkish tone despite recent growth headwinds," the analysts wrote. According to them, today's announcement should confirm that the monetary policy will have a positive impact on the dollar in the medium term. If we talk about the short term, then the absence of significant surprises in the scatter chart will not be in favor of buyers of the US currency, which will look somewhat vulnerable in the coming sessions.

It is worth noting that the current risk appetite, which puts pressure on the dollar, is associated, among other things, with some optimism in Russian-Ukrainian negotiations. There is no actual escalation of the conflict yet, which means that at any moment the craving can turn into a flight from risky assets. The dollar will be back on horseback.

Thus, Credit Suisse maintains a bullish baseline and long-term outlook for the dollar index. Economists are waiting for the rate to strengthen to begin with in the area of 100.00-100.04, then to the top of the five-year range at the level of 102.00-102.50.