The dollar fell to its lows of the day following the Federal Reserve's policy statement, where the central bank said it will start tapering its bond purchases later this month.
The dollar index traded 0.07% lower at 94.02.
Ahead of the announcement, analysts were divided as to what the Fed's actions would mean for the dollar.
"The dollar bearish case today is that the tapering is widely expected and an inherently dovish Fed, concerned about upsetting the bond market, does not change its statement substantially," ING strategists wrote.
"Yet at some point, the Fed is going to have to acknowledge that elevated inflation does not 'largely reflect transitory factors'. Many dovish central banks around the world are already doing this and should the Fed start to show greater concern about this today, U.S. rates and the dollar could get a boost."
Investors will watch closely for Chair Powell's assessment of inflation after other central banks have signalled a more hawkish tilt in the face of rising price pressures, although whether that means higher interest rates soon is still to be seen.
"Fed Policy is under challenge in ways that cannot be remembered since the early Volcker years," said Deutsche Bank strategist Alan Ruskin.
"Inflation is taking off with an economy that has been pricing itself off zero nominal rates and dramatic negative real rates for the last 18 months," he said.
A day ago, the Reserve Bank of Australia abandoned its short-term yield target and dropped its expectation of holding rates at record lows until 2024, though the Aussie fell because the bank also pushed back on aggressive pricing for 2022 hikes.
The Aussie had dropped 1.2% against the dollar on Tuesday and sat at $0.7448 on Wednesday, up 0.3% from the session open. The kiwi was also dragged 1% lower, but found support on Wednesday from strong labour data and hovered at $0.7134, up 0.3%.
Money markets are pricing in a 15 basis point hike from the Bank of England on Thursday, although a weaker pound this week suggest some nervousness that the BoE could disappoint.
Sterling fell to a two-week low at $1.3606.