U.S. Dollar Strengthens Ahead Of Fed Decision

The U.S. dollar advanced against its major rivals in European morning deals on Wednesday, erasing early losses, with investors awaiting the FOMC decision due later in the day, which could back expectations for a September rate hike.

The Fed statement, which will be out at 2:00 pm ET, could provide more insight about the timing of the Fed's rate hike since December 2008. No change on rates is expected at this meeting.

With the U.S. economy showing signs of progress and labour market proving sustained improvement, investors are pricing in for a rate hike as early as September.

Fed Chair Janet Yellen, as well as her colleagues, have repeatedly assured that a rate hike will occur this year depending upon the progress shown by the economy and labor market.

European stocks are trading in a positive territory, as Chinese shares bounced back after authorities said they are still willing to intervene to stabilize the stock market and avert systematic risks. China Securities Regulatory Commission said it was "looking into incidents of share-dumping" on Monday that sent the country's benchmark index to its biggest loss in eight years.

The greenback showed mixed trading against its major rivals in the Asian session. While the currency held steady against the franc and the pound, it declined against the yen and the euro.

In European trading, the greenback recovered to 0.9655 against the franc, from an early 2-day low of 0.9602. The pair ended yesterday's trading at 0.9621. The next possible resistance for the greenback may be located around the 0.98 mark.

The greenback, which fell to 1.5618 against the pound, 1.1083 against the euro and 123.32 against the yen in early deals, reversed way and rose to 1.5587, 1.1029 and 123.73, respectively. On the upside, the greenback is likely to find resistance around 1.55 against the pound, 1.05 against the euro and 125.00 against the yen.

The greenback was trading higher at 1.2965 against the loonie, 0.6673 against the kiwi and 0.7300 against the aussie, reversing from an early low of 1.2918, new 2-week low of 0.6738 and a 5-day low of 0.7350, respectively. If the greenback extends rise, it may challenge resistance around 1.308 against the loonie, 0.65 against the kiwi and 0.70 against the aussie.

In the New York session, U.S. pending home sales for June and crude oil inventories report for the week ended July 24, are set to be published.