The dollar index hovered close to a 2-week high around 96 on Tuesday, amid concerns over a faster pace of Federal Reserve policy tightening and rising tensions in Ukraine. The Fed is set to conclude its two-day meeting on Wednesday, and although it is not expected to move rates, there has been rising expectations for the central bank to bring forward its tightening plans to tame persistently high inflation.
Money markets are priced for a first rate hike in March, with three more quarter-point increases by year-end. Rising geopolitical risks also supported the safe-haven dollar, after NATO said it was putting forces on standby and reinforcing eastern Europe with more ships and fighter jets, in what Russia denounced as an escalation of tensions.