Dollar goes down a little, but stays near its 20-year high before Fed meeting.

The U.S. dollar edged lower in the first hour of European trading on Tuesday, but the dollar was still near its 20-year peak as the market prepared for another rate hike from the Federal Reserve.

At 02:50 GMT (06:50 GMT), the Dollar Index, that tracks the greenback’s performance against an array of six other currencies, was trading 0.1 less at 109.297 however, it was still near the two-decade high of 110.79 that was reached on September. 7.

The U.S. Federal Reserve starts its latest two-day policy-setting session later in this session. It is expected to keep its current policy of imposing interest rate hikes to limit excessive inflation.

A rise by 75 basis points has been expected, however some investors are anticipating a an increase of a full percentage point since the last survey of consumer prices indicated that inflation was still high.

Related: As markets get ready for another big Fed rate hike, the dollar goes up.

It will also be accompanied by a new set of projections regarding inflation growth, economic growth, as well as the direction of interest rates. These will be studied closely to determine what the bank’s central rate is called its terminal rate or maximum rate.

“After the recent developments of inflation and the U.S. economy and inflation that we are now expecting the FOMC to begin to ramp up rate hikes and reach their peak earlier. We expect the Fed the funds (upper) interest rate to hit its highest at 4 percent in December rather than the usual February date,” said analysts at ABN Amro, in a note.

EUR/USD increased by 0.1 percent to 1.0035 and consolidated its standing above par after German producers’ prices increased in August to their highest pace since records were established in the year 2000. They climbed 45.8 percent over the same month in 2013 and soaring prices for energy still acting as the major driving force.

The European Central Bank raised interest rates by 75 basis points in the last week, in an effort to curb inflation which is now in double-digit levels. The news coming from Europe’s largest economy is sure to increase their determination.

USD/JPY increased 0.1 percent to 143.32 The yen was being further weighed down with the United States 2-Year Treasury yield reaching 3.970 percent overnight for it for the first time since the end of November.

The Bank of Japan is scheduled to hold its session on policy this Thursday but it is widely anticipated to keep its ultra-easy stimulus levels unaffected.

The divergence in stance in both the Fed in comparison to the BOJ is impacting heavily on the yen. the pair reaching to 144.99 in the beginning of September for the first in the last 24 years.

GBP/USD gained 0.1 percent to 1.1442 The sterling recovered to some extent following the drop to a low of 37 years ago in the range of 1.1351 at the close of the week.

The Bank of England will also set its policy on Thursday, and a second interest rate increase is anticipated to be either the 50-75 basis points.

USD/CNY rose 0.1% to 7.0128, remaining above the psychologically-important 7 level with the Chinese authorities having to strike a delicate balance between loosening monetary policy to support a weakening economy and preventing further losses in the currency.

Related: Prior to the central bank binge, stocks struggle and the dollar dominates.

In other news, USD/SEK rose 0.1 percent up to 10.7734 as well EUR/SEK increased by 0.2 percent to 10.8069 in advance of a meeting of Sweden’s Riksbank later during the session. The meeting is expected to lead to tightening in the monetary system.

“Inflation is far too high and yet over the Central Bank’s projection. The Riksbank did not act until too late and is now required to regain space,” said analysts at Nordea in a statement.

“In uncertain times, the Riksbank will raise the rate of interest at 75bp …according to our projection. A hike of 1% point is not entirely excluded.”