The U.S. dollar rose to three-week highs against a basket of currencies on Tuesday as the Federal Reserve begins a two-day policy meeting where it is widely expected to raise interest rates for the fifth time since 2015.
Investors will be watching for any signals that Fed officials are more optimistic on the prospect of faster growth as lawmakers appear close to passing a large overhaul of the tax code for clues on how many further rate increases are likely next year.
People are looking for a little more confidence on the fact that tax legislation is set to pass, Sireen Harajli, a foreign exchange strategist at Mizuho in New York. The general theme is that the dollar will continue to find support as we approach the end of the year.
The dollar index hit 94.219, the highest since Nov. 14, before falling back to 94.07. The greenback rose more than 1 percent last week, its biggest weekly rise since the end of October, but is down around 9 percent this year.