Before the Fed’s policy decision was released on Wednesday, the U.S. dollar index rose to a one-week high, as higher-than-expected U.S. producer prices reignited inflation concerns and pushed up U.S. Treasury yields. The U.S. dollar rose against the G-10 currencies almost across the board, with the exception of the British pound. U.S. Treasury yields have risen; the focus remains on whether the Federal Reserve hinted at speeding up the process of policy normalization on Wednesday, and the threat of omicron variants.

The U.S. dollar index rose 0.20% to 96.54, after it fell 0.2% during the London session; the latest signs of rising inflation in the United States appeared earlier on Tuesday. Data showed that the producer price index (PPI) rose higher than expected due to continued supply tightness. Data show that this is the largest annual increase in at least 11 years. David Riley, chief investment strategist at BlueBay Asset Management, said that it is clear that the Fed needs to respond to rising inflation. In this environment, it is difficult not to be optimistic about the dollar.

Action Economics global foreign exchange analyst Ron Simpson said that the contrast between the monetary policy of the Federal Reserve and the European Central Bank is driving the euro-dollar exchange rate. The Fed will announce its latest policy decision on Wednesday, and the European Central Bank will announce its policy decision on Thursday. It seems that the dovish stance of the European Central Bank will not be over in the short term, and the Fed seems to become a little more hawkish every time it meets.

The pound rose 0.11% to 1.3231 against the US dollar after the UK released a strong employment report, and government spokesman Max Blain said that there is no plan to further tighten epidemic prevention restrictions; European traders said that the pound is supported by corporate demand, and real money institutions are Seller.

The euro fell 0.22% to 1.1259 against the U.S. dollar. News about U.S. officials visiting Russia due to the Ukraine issue caused the euro’s decline to expand; corporate and fixing-related selling also put pressure on the euro; the euro rose 0.4% against the U.S. dollar in early London trading due to companies Demand for buying and options; a large number of 1.1300 and 1.1400 options expire in the next few days; the euro against the Swiss franc remains above the year's low of 1.0374.