"The Fed doesn't necessarily need to see that inflation is at 2 percent, but certainly on the glide path towards 2 percent. I would not be surprised to see markets trading off of it," said Mark Luschini, chief market strategist at Janney Montgomery.
Traders are watching the 8:30 a.m. ET release of the consumer price index closely, even though the central bank's preferred measure of inflation is the personal consumption expenditure inflation reading. The headline CPI is expected to increase 0.3 percent after rising 0.4 percent last month, and it is seen 0.2 percent higher when excluding food and energy.