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Euro whipsaws against dollar after July Fed minutes

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The U.S. dollar hit a session low against the yen, while the euro hit a session high against the dollar in the wake of the Federal Reserves meeting minutes.

The U.S. dollar rebounded from more than seven-week lows against those three currencies, while expectations that the Fed could elaborate on a comment made in the central bank's July meeting statement that near-term risks to the U.S. economic outlook had diminished also helped the dollar.

Analysts said such an elaboration could be perceived as a hint that a Fed rate increase this year is still possible. Federal funds futures on Wednesday implied traders see a 47 percent chance of a rate hike in December and a 63 percent chance in June 2017, according to CME Group's FedWatch program.

"The risk is that if the minutes were to have an air of optimism or a sense of hawkishness, that could boost the chance of a rate hike this year and brighten prospects for the dollar," said Joe Manimbo, senior market analyst at Western Union Business Solutions.

The dollar's gains were muted, however, as traders focused on San Francisco Fed President John Williams' dovish comments on Monday, rather than New York Fed and Atlanta Fed President Dennis Lockhart's signals on Tuesday of a potential rate hike before the end of the year.

The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.09 percent at 94.70 after falling as low as 94.426 Tuesday. That marked its lowest level since June 24, or the day after Britain voted to exit the European Union, which unleashed turbulence in global markets.

"The market is agreeing that Williams speaks for the Fed at this moment, and Dudley and Lockhart are trying to keep a bit of optimism in the market," said Alfonso Esparza, senior currency strategist at Oanda in Toronto.

The euro was last up 0.18 percent against the dollar at $1.1297, not far from its high touched Tuesday of $1.1322. The dollar was down 0.18 percent against the Japanese yen at 100.14 yen, after hitting a low Tuesday of 99.53 yen.

Against the Swiss franc, the dollar was last up 0.12 percent at 0.9607 franc, compared to a low Tuesday of 0.9585 franc.

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