U.S. Dollar Weakens Ahead Of Fed Decision

The U.S. dollar lost ground against its major counterparts in the Asian session on Wednesday, as traders await the Federal Reserve's interest rate decision later today for more clues about future path.

Economists expect the bank to leave interest rate unchanged between 0 and 0.25 percent and retain the open-ended quantitative easing program.

All eyes are on the accompanying statement to get more indications about the interest rate outlook.

In its April policy statement, the Fed said it would hold interest rates at zero "until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals."

The Fed will also release its economic projections, which indicates the expected depth of recession and speed of recovery.

Some economists expect the central bank will adopt yield curve control to curb a recent rise in bond yields.

The greenback declined to 1.3370 against the loonie, 0.7006 against the aussie and 0.6561 against the kiwi, from its early highs of 1.3428, 0.6933 and 0.6495, respectively. The greenback is seen finding support around 1.30 against the loonie, 0.72 against the aussie and 0.68 against the kiwi.

The greenback depreciated to a 5-day low of 1.1370 against the euro and a 3-month low of 1.2779 against the pound, off its early highs of 1.1332 and 1.2706, respectively. The next possible support for the greenback is seen around 1.15 against the euro and 1.30 against the pound.

The greenback fell to a 9-day low of 107.38 against the yen, from a high of 107.87 hit at 8:30 pm ET. On the downside, 105.00 is possibly seen as the next support level for the greenback.

The greenback reversed from an early high of 0.9515 against the franc, with the pair trading at 0.9485. The greenback is poised to target support around the 0.92 level.

Looking ahead, U.S. CPI and monthly budget statement for May are scheduled for release in the New York session.

At 2:00 pm ET, the Fed announces its decision on interest rate. Economists widely expect the federal funds rate to be kept at 0 - 0.25 percent.