During today's Asian trading, the US dollar fell slightly against the major currencies, but remained near a 3.5-month high.

The ICE index, which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), fell by 0.05%.

The market's attention is shifting to the Fed's two-day policy meeting, which will be held this week. Since the previous meeting on June 16, when Fed officials refused to mention the coronavirus as a factor affecting the economy, the number of COVID cases has increased. However, many economists still expect that discussions on reducing stimulus measures will begin at the meeting.

While inflation is seen as an upside risk to the projected hiking cycle, COVID-19 and its mutations are a downside risk. Analysts at Rabobank point out there is no update of the dot plot this month, so officially the median FOMC participant will still expect two hikes of 25 bps each in 2023. They argue upside risks to inflation could lead to another upward shift in the dot plot, but the downside risks from a prolonged impact of COVID19 could still push the dot plot in the opposite direction.