The US dollar recovered some losses against the euro on Wednesday after touching a more than one-year low in the prior session, but hit a more than three-week low against the yen as traders awaited European Central Bank and Bank of Japan meetings. Market watchers will be looking to see if the recent strength of the euro and the yen influence policy outlooks from the European and Japanese central banks.
The ECB meets on Thursday and is expected to adjust its language as it gets closer to normalizing policy. That may include dropping a reference to its readiness to extend or expand its bond-buying program. Analysts said, however, that the central bank would likely delay significant details on its plans to taper its asset-purchase program until September. That expectation of a tight-lipped ECB weighed on the euro.
The euro was last at $1.1523, near the day's session low of $1.1511 and down about 0.2 percent. That still kept it near Tuesday's more than one-year high against the greenback of $1.1583. "Most sensible commentary is rightly pointing out it's doubtful (ECB President) Draghi will deliver anything tangible in terms of a tapering tomorrow," said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York.
The dollar index, which measures the greenback against a basket of six rival currencies, was last up 0.2 percent at 94.744 but not far from a more than 10-month low struck Tuesday of 94.476. The dollar index remained near Tuesday's lows after Republicans failed late on Monday to pass a healthcare bill, raising doubts about President Donald Trump's agenda, and as markets have begun to doubt the Federal Reserve's ability to hike interest rates again this year given weak US economic readings. The dollar was down 0.3 percent against the yen after touching 111.56 yen, its weakest against the Japanese currency since June 27.