The dollar rose against a basket of currencies on Wednesday, recouping some of the previous day's sharp losses, on expectations the Federal Reserve is unlikely to deliver significant changes to its policy outlook.
Two-year Treasury yields held above 0.51 percent in European trade, providing support to the dollar. It fell on Tuesday after weaker-than-forecast corporate earnings and durable goods data.
The Fed's first two-day policy meeting of the year concludes on Wednesday, and policymakers will likely restate their "patient'' approach to raising rates, while also voicing faith that the economy will continue to pick up.
While data such as consumer spending and home sales were more robust, some traders and investors are getting worried the Fed could turn more cautious in its guidance on future rate rises, given the plunge in oil prices is cooling inflationary pressures.
"The Fed is going to be patient and we could see investors price out chances of a near-term interest rate hike,'' said Peter Kinsella, currency strategist at Commerzbank, London. ``That could lead to short-term dollar weakness.''