Dollar Near Lowest Level in 5 Weeks Before Federal Reserve Decision

The dollar stabilized near its lowest levels in five weeks, ahead of the conclusion of the Federal Reserve's monetary policy meeting as investors await clarity on the likely path the central bank will take following global banking turmoil. Investors' focus is on whether the U.S. central bank will maintain its tightening policy to combat stubborn inflation or temporarily halt interest rate hikes in light of recent problems faced by banks, including bankruptcies and bailout packages. The dollar index, which measures the performance of the U.S. currency against six major currencies, reached 103.19, slightly higher than the five-week low of 102.99, which it hit the previous night. The euro stood at 1.0770 dollars, stable near the five-week high of 1.0789 dollars recorded overnight. CME's FedWatch tool indicated that markets now expect a 15 percent chance that the Federal Reserve will not raise interest rates, with an approximately 85 percent chance that it will raise them by 25 basis points. Just a month ago, the market was anticipating a 24 percent chance of a 50 basis point hike. Investor sentiment remained fragile as concerns about the future of the banking sector began to ease following recent market volatility that saw the collapse of two American banks earlier this month and the rescue of Credit Suisse earlier this week.