Investing.com - The U.S. dollar pulled back from 13-month lows against a basket of the other major currencies on Wednesday as investors awaited the outcome of the Federal Reserve’s latest policy meeting later in the day.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, edged up to 93.99 by 03.39 a.m. ET (07.39 a.m. GMT).
The index touched a low of 93.46 on Tuesday, its weakest since June 2016. The index has fallen around 2% so far this month and is down around 8% for the year to date.
The Fed is widely expected to keep policy on hold, but investors are hoping that the bank’s rate statement will reveal more about plans for monetary tightening this year.
The sluggish inflation outlook has raised doubts over whether the Fed will be able to stick to plans for a third rate hike this year.
Investors were also watching political developments in Washington after the U.S. Senate narrowly agreed to open debate on a bill to overhaul the Affordable Care Act.
But questions remained about whether Republicans would be able to gather enough support for any of the proposed approaches to repeal and replace Obamacare.
Declining expectations that the Trump administration will be able to push through items on its legislative agenda such as overhauling the tax code and implementing fiscal stimulus have fed into recent dollar weakness.
The dollar was steady against the yen, with USD/JPY at 111.85, holding gains after ending Tuesday’s session up 0.81%.
The euro was little changed, with EUR/USD at 1.1642. On Tuesday the euro touched a high of 1.1711, the most since August 2015, propelled higher by an upbeat report on German business sentiment.
The Australian dollar was lower, with AUD/USD down 0.49% to 7896 after soft domestic inflation data cooled expectations for an interest rate hike this year.