Dollar Strengthens Ahead of Fed Meeting as Job Data Surprises

The U.S. dollar strengthened modestly on Tuesday, with the U.S. Dollar Index (DXY) rising 0.19% to 99.282 as of 20:10 GMT+2. This comes a day before the Federal Reserve concludes its two-day policy meeting, keeping investors on edge.

The greenback gained support from unexpectedly strong U.S. labor market data. The October Job Openings and Labor Turnover Survey (JOLTS) showed job openings climbing to 7.670 million, the highest in five months, signaling persistent labor demand. The report is being interpreted as a factor that could justify tighter monetary policy, despite widespread expectations of an interest rate cut.

Investors also bought dollars to cover losses from last week, adding upward momentum to the currency. Yet analysts note that near-term gains may remain limited, as the market strongly anticipates a 25-basis-point rate cut at the end of the Fed’s meeting. Futures markets currently reflect a 95% probability of such a reduction.

Meanwhile, U.S. equities benefited from positive employment trends. The ADP report recorded a 4,700-job gain in nonfarm private sector employment, rebounding from a previous loss of 13,500 jobs. The strong labor data helped offset some of the dollar’s gains, keeping markets finely balanced ahead of the Fed’s announcement.

Looking at DXY trends, the index has shown mixed performance recently: it is up 0.36% over the past five days but down 0.48% over the past month and 8.52% year-to-date. Its daily range on Tuesday spanned 98.954 to 99.312, reflecting intraday volatility as traders weigh economic data against anticipated Fed action.

The U.S. Dollar Index tracks the greenback against a basket of major currencies, with the euro, yen, and pound carrying the largest weights. Movements in DXY often provide a clear signal of the dollar’s relative strength in global markets, influencing forex, commodities, and equities alike.

Investors now await the Fed’s decision and subsequent guidance, with attention focused on how the central bank balances the robust labor market against the need for monetary easing, potentially shaping currency and equity markets in the final weeks of 2025.