2019.03.2009:23:00UTC+00U.S. Dollar Slides As Fed Likely To Maintain Dovish Stance

The U.S. dollar fell against its most major counterparts in the European session on Wednesday, trimming its early gains, as investors await the Fed statement for more clarity on rate hike pause plans in the wake of slowing economy.

The Fed announces its decision at 2:00 pm ET, followed by a press conference with Chairman Jerome Powell half an hour afterwards.

The Fed is expected to keep its benchmark rate in a range of 2.25 percent to 2.5 percent.

Along with the statement, the Fed will release new economic and interest-rate projections, with most economists forecasting a downgrade to rate hikes for this year from two to one or perhaps not at all.

Chairman Jerome Powell's press conference is in focus for clues about Fed policy stance. In his previous meeting, Powell signaled a pause to the tightening cycle on signs of slowing economic growth in the U.S.

The currency was higher in the Asian session on risk aversion, weighed by worries about U.S.-China trade talks, after a report by Bloomberg said U.S. negotiators are concerned that China is pushing back against American demands.

The greenback declined to more than a 2-week low of 1.1366 against the euro, from a high of 1.1336 hit at 4:45 am ET. On the downside, 1.15 is likely seen as the next support for the greenback.

The U.S. currency retreated to 111.45 versus the yen, off a 5-day high of 111.69 touched at 9:15 pm ET. Next key support for the greenback is possibly seen around the 110.00 level.

Minutes from the January 23 monetary policy meeting showed that members of the Bank of Japan's Monetary Policy Board said that the country's economy continues to expand at a moderate pace.

Annual inflation is expected to continue to increase gradually towards 2 percent, the bank said - and the BoJ is likely to keep interest rates low for an extended period of time to help facilitate that.

The greenback slipped to 0.9977 against the franc, its lowest since March 4. This follows a high of 1.0010 seen at 4:30 am ET. The greenback is poised to find support around the 0.98 area.

The greenback edged down to 1.3328 against the loonie, 0.7099 against the aussie and 0.6857 against the kiwi, reversing from its early multi-day highs of 1.3346, 0.7057 and 0.6828, respectively. The next likely support for the greenback is seen around 1.30 against the loonie, 0.72 against the aussie and 0.70 against the kiwi.

On the flip side, the greenback appreciated to a weekly high of 1.3146 against the pound from yesterday's closing value of 1.3264. The greenback is seen challenging resistance around the 1.30 region.

Data from the Office for National Statistics showed that UK consumer price inflation unexpectedly accelerated in February for the first time in six months.

The consumer price index rose 1.9 percent year-on-year following a 1.8 percent increase in January. Economists had expected the inflation rate to remain unchanged.

The Federal Reserve announces its interest rate decision at 2:00 pm ET. Economists widely expect the central bank to keep benchmark rate in a range of 2.25 percent to 2.5 percent.