US stock-index futures followed European markets into the green after a closely-watched economic report from Germany boosted traders' sentiment ahead of the Fed meeting later in the day.
As of 8:31 a.m. ET, Dow Jones Industrial Average futures jumped 55 points to 12952, S&P 500 futures rose 6.8 points to 1374 and Nasdaq 100 futures gained 13 points to 2660.
The Centre for European Economic Research's (ZEW) gauge of investor sentiment in Germany leaped by 16.9 points to 22.3 in March, its highest level since June 2010. Economists forecast a significantly lower reading of 10.
Germany is Europe's biggest economy, and indeed one of the larger economies in the world, and therefore tends to be very closely watched by investors in Europe, Asia and the US There have been worries that the demand across the continent that has been severely weakened by the debt crisis might take a big toll on the country's important manufacturing sector.
"It seems as if the crisis in the [eurozone] has taken a pause for breath," ZEW President Wolfgang Franz said in a release. "In Germany, due to the good employment situation, domestic demand is likely to continue to stimulate growth."
The docket of economic reports for the US is full on Tuesday. The Federal Reserve releases its decision from its one-day meeting at roughly 2:15 p.m. ET. The central bank is expected to hold steady its aggressively pro-growth monetary policy in which it plans to hold interest rates at extraordinarily low levels until the middle of 2013. Economists say the Fed is unlikely to roll out a third round of quantitative easing to give the economy a further boost at this point. Recent data have shown the employment situation in the US improving, and other measures of economic output trending to the upside.
"At the moment we're at a wait and see mode," Louise Cooper, markets analyst at BGC Partners said in an interview with FOX Business.
Analysts will be looking to see if the Fed makes any statement about swiftly rising oil prices. As part of its dual mandate, it needs to keep inflation in check and there have been concerns that high energy prices could make their way into the broader price level.
US retail sales rose 1.1% in February, more than the 1% expected and the largest gain since September 2011, the Commerce Department reported. Excluding the auto segment, sales were up 0.9%, higher than the 0.7% expected.
In currencies, the euro fell 0.33% to $1.3111, while the US dollar climbed 0.21% against a basket of six world currencies tracked by the dollar index.
Energy futures were mostly to the upside, helped by the strong data from Germany. The benchmark crude oil contract traded in New York rose 55 cents, or 0.52%, to $106.89 a barrel. Wholesale New York Harbor gasoline rose 0.57% to $3.342 a gallon.
A gallon of regular at the pump costs $3.81 on average nationwide, up from $3.64 last month and $3.70 last year, according to the AAA Fuel Gauge report.
Gold slipped $3.80, or 0.22%, to $1,696 a troy ounce. The yield on the 10-year US Treasury note rose 0.021-percentage point to 2.053%.
European blue chips rallied 1.1%, the English FTSE 100 jumped 0.93% to 5948 and the German DAX climbed 1% to 6973.
In Asia, the Japanese Nikkei 225 edged higher by 0.09% to 9899 and the Chinese Hang Seng gained 0.97% to 21340.