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Dollar whipsaws after release of Fed meeting minutes

  • The dollar lost close to 0.20 percent after hitting a one-week high of 89.998 earlier in the session.
  • Fed meeting minutes said participants saw inflation moving up to the Fed's 2 percent inflation goal over the medium term.
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The dollar wobbled Wednesday, after minutes from the Federal Reserve's recent policy meetingpointed to more rate hikes in months to come.

The dollar index, which measures the greenback against a basket of six major currencies, dropped about 0.20 percent after the release of the minutes, before regaining much of its losses.

The dollar last traded up 0.12 percent at 89.83, after hitting a one-week high of 89.998 earlier in the session.

"Almost all participants" saw inflation moving up to the Fed's 2 percent inflation goal over the "medium term" as growth "remained above trend and the labor market stayed strong," according to a summary of the meeting's minutes.

The dollar sold off in recent months on worries that the Trump administration's recently passed tax cuts and plans for large government spending would expand the deficit and worries that the U.S. government is pursuing a weak-dollar strategy.

The euro weakened against the dollar, last trading down 0.12 percent at 1.2321.

The euro has been driven by dollar weakness and then the recent recovery, but investors remain long on the currency in anticipation the European Central Bank will soon begin unwinding its balance sheet.

"The euro remains under pressure but that is more of a USD recovery story than anything else," Brad Bechtel, managing director FX at Jefferies, said in a note.

Traders will be parsing U.S. Federal Reserve minutes due later on Wednesday for hints on the future pace of U.S. monetary tightening after worries about rising inflation rattled markets in recent weeks.

Sterling bounced off one-week lows against the greenback after Bank of England policymakers struck a hawkish tone on inflation and interest rates in testimony to parliament. The British pound held steady against the dollar.

The Canadian dollar weakened to a nearly two-week low against its U.S. counterpart as oil prices fell.

--CNBC's Chloe Aiello contributed to this report.