The U.S. Dollar Index (DXY) continues to show upside momentum, reaching a two-week high. However, the rally has not extended further, and market participants have adopted a wait-and-see stance ahead of the conclusion of the Federal Reserve's important two-day Federal Open Market Committee (FOMC) meeting.

The Fed will announce its decision on Wednesday; rates are expected to be left unchanged. The market's focus, however, will be on the accompanying statement and Fed chair remarks at the post-meeting press conference. In addition, key U.S. macro releases — the advance Q3 GDP estimate and the Personal Consumption Expenditures (PCE) price index due on Thursday — could provide further clues about the Fed's policy path.

Fed officials have recently signaled there is no urgent need to raise rates right now. Nevertheless, the market prices in roughly an 80% chance of a rate hike in December. Inflation concerns tied to high energy prices support expectations of further tightening. A further supporting factor is the rebound in Treasury yields after a recent slide to a three-week low. That, together with persistent geopolitical uncertainty, underpins the U.S. dollar.

From a technical standpoint, DXY retains a constructive bullish bias, staying above all key moving averages. Immediate resistance comes in at 102.60 and the month's high. Support comes at the round level of 102.00, with further support at 101.80. On a deeper pullback, the index would test the month's low near 101.40. Oscillators are positive, so bulls have the edge.

The table below shows the dollar's percentage change versus major currencies for the current week. The strongest performance for the dollar has been versus the euro.

In conclusion, the path of least resistance for the Dollar Index is upward. Market participants should nevertheless exercise caution and consider all scenarios following the Fed meeting and the release of key macroeconomic data.