The greenback softens against the euro and the U.K. pound as investors seek higher returns ahead of a key announcement from the Federal Reserve.
NEW YORK (CNNMoney.com) -- The dollar fell Wednesday as overseas stock markets and commodities rallied, boosting demand for higher yielding currencies such as the euro and British pound.
Investors were waiting to hear the latest from the Federal Reserve on monetary policy, due later in the day.
The dollar was down 0.2% against the euro to $1.4751. It slid 0.5% versus the U.K. pound to $1.6528. Against the Japanese yen, however, the dollar rose 0.6% to ¥90.93.
The price of gold rose to an all-time high, while oil pushed near its highest level of the year. A weaker greenback makes dollar-denominated commodities such as gold and crude oil cheaper for buyers in other currencies.
U.S. stock futures were pointing for a stronger opening in New York, while European markets rallied. Asian shares closed higher.
"European markets are rebounding quite soundly following yesterday's sell-off, a factor that is helping to put downside pressure on the U.S. dollar and Japanese yen," Sacha Tihanyi, currency strategist at Scotia Capital, wrote in a research report.
"The next major issue of focus will be today's FOMC meeting," he added.
The Federal Reserve's Open Market Committee concludes a two-day meeting Wednesday. The U.S. central bank is widely expected to hold the fed funds rate, a key overnight bank lending rate, at historic lows near 0%.
Investors, however, will be paying particularly close attention to the Fed's accompanying statement for hints about when the central bank plans to start removing the billions of dollars in stimulus funds it has poured into the economy in the wake of the financial crisis.
