On Wednesday, the US dollar is trading somewhat bearish against other major currencies ahead of the FOMC press conference scheduled for later in the day, amid worries that the Fed could turn more dovish. At the time of writing, the US dollar index DXY is trading around 96.33.

While commodity currencies like the AUD and NZD have eased lower slightly, the sentiment continues to support both currencies as Australia and New Zealand emerge out of the lockdown after containing the pandemic in their respective countries. While the JPY is trading steady against the US dollar, the GBP has strengthened to a three-month high fueled by the risk-on sentiment in markets.

Economists expect the Fed to step in with dovish moves to curtail the unexpected increase in US bind yields recently, possibly with some yield curve control measures. The dollar is also trading cautious ahead of the meeting as policymakers of the Fed are expected to unveil their first economic projections for this year after the pandemic struck the US.

Overall, markets continue to trade with a sense of optimism about economies restarting after lockdowns around the world, which can drive recovery in the global economy. This sentiment has further weakened the safe haven appeal of the US dollar.