U.S. Dollar Slides Ahead Of Fed Statement

The U.S. dollar traded lower against its major opponents in European deals on Wednesday, ahead of the Fed decision that is widely expected to deliver a quarter point rate and provide indications about the pace of monetary tightening for this year.

The Fed began its two-day policy meeting on Tuesday, with a rate announcement due later in the day.

Economists widely expect the Fed to raise benchmark rate by 25 basis points to 1.75 percent from the current 1.50 percent.

All eyes are on the Fed statement for clues regarding whether it signals four rate increases in 2018, instead of three rate hikes in December forecast.

Along with the Fed statement, the central bank will issue its updated its quarterly forecasts, which show its projections for growth, unemployment, inflation and the possible pace of its rate increases over the next three years.

New Fed Chairman Jerome Powell's first press conference as head of the central bank is also likely to attract considerable attention.

The greenback dropped against its major rivals in the Asian session, with the exception of the pound.

The greenback reversed from an early high of 1.2241 against the euro, dropping to 1.2291. If the greenback falls further, 1.24 is likely seen as its next support level.

The Munich-based Ifo Institute said its Spring forecast that Germany's strong economic growth is set to continue in the months ahead, as demand for the country's exports are expected to improve.

Gross domestic product is forecast to grow 2.6 percent this year after 2.2 percent increase in 2017.

The greenback edged down to 0.9520 against the Swiss franc and 106.09 versus the yen, off its early highs of 0.9566 and 106.55, respectively. The greenback is seen finding support around 0.93 against the Swiss franc and 104.00 versus the yen.

The greenback declined to a 2-day low of 1.4075 against the pound, after having climbed to 1.3997 at 5:00 pm ET. The next possible support for the greenback is seen around the 1.43 level.

Figures from the Office for National Statistics showed that the UK jobless rate in the three months to January was the joint lowest since 1975 and the employment rate rose to a record high.

The ILO unemployment rate eased to 4.3 percent from 4.4 percent in the three months to December. Economists had expected it remain unchanged at 4.4 percent. The rate was 4.3 percent in the August to October 2017 period.

The greenback slipped to a 6-day low of 1.3003 against the loonie, reversing from an early high of 1.3077. On the downside, 1.28 is seen as the next support level for the greenback.

On the flip side, the greenback strengthened to a 2-1/2-month high of 0.7153 against the kiwi and a 3-month high of 0.7672 against the aussie, off its early lows of 0.7188 and 0.7708, respectively. The greenback is poised to test resistance around 0.70 against the kiwi and 0.75 against the aussie.