The U.S. dollar inched higher on Wednesday after the Federal Reserve kept interest rates unchanged, as was largely expected.
The currency rose 0.11 percent to 94.59 against a basket of rival currencies. The euro was 0.21 percent lower at $1.1667.
The Fed's policymaking committee kept rates in a range of 1.75 and 2 percent.
The Fed said in a statement released Wednesday, "Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective over the medium term. Risks to the economic outlook appear roughly balanced."
The Fed also upgraded its view of the U.S. economy from "solid" to "strong."
The dollar had been trading higher earlier in the session as fears of an escalation in the trade dispute between the United States and China, and higher U.S. Treasury yields also supported the greenback.
Uncertainty about an escalated months-long dispute would mean for the Chinese and then the global economy led investors to buy the dollar and sell currencies linked to China's economic fortunes.
The U.S. administration plans to propose a 25 percent tariff on $200 billion in Chinese imports, up from an original 10 percent, to pressure Beijing into making trade concessions, a source familiar with the matter said. China has vowed to retaliate.
The offshore Chinese yuan slid more than half a percent on reports of the new tariffs. A survey showing Chinese manufacturing grew at the slowest pace in eight months in July also hurt the currency.
The dollar was 0.34 percent lower against the .
under pressure from the stronger dollar and a Purchasing Managers' Index survey that showed factory output was growing but had nudged up only slightly from June's 18-month low.
Sterling held near a one-week low before a Bank of England policy meeting that is widely expected to raise interest rates for the second time since the global financial crisis.