Over the past week, the US currency has risen by more than 0.5% against its main competitors, including the euro.

Concerns about the likely default of the Chinese real estate giant Evergrande and concerns about possible ripple effects have triggered a sharp decline in global stock indices.

In particular, the S&P 500 experienced the strongest drop since May, sinking by 1.7%.

At the same time, the greenback has become one of the main beneficiaries of market turbulence.

The USD index reached monthly highs on Monday, rising to 93.45 points.

The "fuel" for the dollar's growth was also the expectation of an early curtailment of monetary incentives from the Federal Reserve.

Some currency strategists see that the dollar is now getting a kind of double boost.

JPMorgan believes that the greenback will benefit from both corners of the so-called "dollar smile" at the same time.

"Our confidence has increased that the US currency is on the verge of a clearer breakthrough from either end of the dollar smile or from both ends at the same time," the bank's analysts said.

"On the left side of the smile, we see increasing anxiety about the global economic slowdown and growing global risks from China and related geopolitical concerns. On the right side is the Fed and the exclusivity caused by interest rates in the United States. Members of the FOMC at the next meeting are likely to signal the beginning of an increase in interest rates from the end of next year and, most importantly, up to six increases by the end of 2024," they added.

Morgan Stanley analysts also see the potential for further growth of the USD and believe that the Fed's next meeting may be an important moment.

"The September FOMC meeting may become a key catalyst for an increase in real yields in the US, which will generally contribute to the appreciation of the dollar," they said.

On the eve of the next Fed meeting, the greenback took a pause in growth.

On Tuesday, the USD index sank to local lows in the area of 93.00, but then rose to 93.20 points.

Meanwhile, the key US stock indexes were unable to recover even some of their recent losses and declined at the close of yesterday's trading, although they previously showed a willingness to show a decent rebound.

It seems that investors were still worried about the fate of Evergrande, which did not pay interest on Monday to at least two of its largest bank creditors.

As for the EUR/USD pair, the euro tried to move to growth, taking advantage of the dollar's weakness. However, after encountering resistance around $1.1748, the single currency was forced to retreat and by the close of the day it stabilized at $1.1725.

On Wednesday, risky assets cheered up somewhat, the main US stock indexes returned to the green zone, and demand for safe havens weakened slightly after the Chinese real estate giant Evergrande said that it would make the next coupon payment on bonds in yuan, dispelling immediate fears of default.

However, some anxiety still remains, as it is still unclear whether the company will be able to pay a coupon on its dollar bonds due on Thursday.

In addition, traders are waiting for the results of the two-day Fed meeting, which will be announced on Wednesday evening.

In anticipation of the central bank's verdict on monetary policy, the USD index is trading in a narrow range, remaining close to the monthly high of 93.45 points.

If the Fed remains cautious in its statements and assessments, for which there are reasons, including current problems with employment, slowing inflation and the continuing risks of a possible deterioration of the epidemiological situation in the United States, the greenback has every chance to return back to the area of 92, and then go lower. In an alternative scenario that is unfavorable for risky assets, we can expect the USD to grow to August highs around 93.70.

The Fed's "soft" comments, implying a desire to get more data before announcing the curtailment of quantitative easing, are able to return active stock purchases and push US stock indexes to update record highs.

If the Fed officials prefer to emphasize that the current incentives have outlived their usefulness and bring only negative secondary effects, a deeper correction and reassessment of risks may begin in the markets.

The FOMC's hawkish comments may increase the contrast between the Fed and ECB rates. In this case, the EUR/USD pair is able to adjust to the area of 1.1500 before the end of the year. The Fed's soft rhetoric, on the contrary, can push the euro to rise against the US dollar in the direction of $1.20.

For several months, investors have been speculating about when the US central bank will announce a reduction in the bond purchase program.

This year, the Fed has only three statements left to make on monetary policy. If the central bank wants to give the market enough time to prepare for the reduction of the asset purchase program, it can make comments on this matter today.

And if the US central bank has prepared any details regarding the curtailment of QE, then Fed Chairman Jerome Powell will announce them.

Economic forecasts and a dot chart will provide the first hints about the central bank's position.

When the central bank published its latest forecasts in July, seven members of the Fed expected to raise rates next year, and two of them were set for two rounds of increases. If any of these numbers increase, the dollar will strengthen after them.

At the same time, Powell's press conference will become a kind of highlight of the program. If he does not name the exact date of the beginning of the curtailment of monetary incentives, investors will be disappointed, to which the dollar will react with a decline.

However, if the Fed still believes that the procedure for reducing QE will be launched in 2021, any weakness of the US currency will be short-lived.

Over the next three to six months, the dollar is likely to grow by 5% rather than decline by a similar amount, Wells Fargo analysts believe.

According to them, a hawkish surprise from the Fed is much more likely than a similar surprise from the ECB. This means that an increase in the interest rate differential between the US and Europe, and with it a strengthening of the greenback, is more likely than a decrease in the coming months.

"We see an extremely small risk that the ECB will make a hawkish surprise, which will significantly change the expectations of an ECB rate hike (for example, by 25-50 basis points) over the next six months. The Fed's dovish surprise may occur if the data on inflation or employment in the US are significantly worse than expected, but short-term rates in the country are already almost zero, which means that there is probably more room for their increase than for a decrease," the bank's analysts noted.

"This point of view may turn out to be wrong if the foreign exchange market begins to focus on any other driver besides monetary policy. However, even in this case, we doubt that any other factors will tilt the balance of risks towards a significant fall in the dollar, rather than its growth," they added.

For three days now, the EUR/USD pair has been consolidating above the 1.1700 mark and today it has risen again to the 1.1730-1.1740 area.

However, despite this rebound, the short-term prospects of the pair remain uncertain.

If the upward momentum increases, the bulls may aim for last week's highs near 1.1845, but for this they will need to overcome the resistance at 1.1760, and then at 1.1790, near which the 55-day moving average passes.

On the other hand, the absorption of the September low at 1.1700 (the key current support) will bring into play 1.1663 (the 2021 low, marked on August 20).