An FM receiver is unaware of the modulation level (frequency deviation) of the signal and has to make an estimate of it, or some reasonable time-average of it, and accordingly set the input filter's bandwidth. We calculate modulation by measuring the autocorrelation of the recovered audio signal instead of its peaks, and then applying a peakhold detector. Since FM noise can be modeled to be somewhat uncorrelated, we can expect to get an accurate estimate of signal power while rejecting noise power substantially if we measure a one-sample delayed autocorrelation estimate. Since the above measurement is alike a power measurement, we compute its square root, gain adjust it to obtain a cleaner peak measurement, and then track these clean peaks using a leaky integrator. This gives an estimate of modulation that subdues the effect of the noise.