This week will see an important event for the U.S. dollar: the Federal Reserve's policy meeting. While investors seek to gauge the future direction of monetary policy whether or not the Fed tapers this week is unlikely to be a major factor for the U.S. dollar index.
Concerns about Fed tapering weighed on global markets throughout much of 2013 after the U.S. central bank first raised the possibility of reducing its $85-billion-a-month bond-purchase program in May. The central bank finally began tapering in December 2013, reducing its bond monthly purchases by $10 billion. It followed suit in January and March of 2014, bringing monthly purchases down to $55 billion.
Investors are keen to see whether or not the central bank continues down this path at this week's Federal Open Market Committee meeting. So, what's the story with the Federal Reserve's tapering of its monthly bond-purchase program and the U.S. dollar index?