The dollar traded below a six-week high against the yen on Wednesday, as the market awaited the Federal Reserve's policy statement for hints on the US interest rate outlook, while the kiwi rose on the back of higher dairy prices, Reuters reported.
Fed Vice Chair Stanley Fischer said last month that the central bank remained on track for two more rate increases this year despite the recent weak economic data.
The central bank raised rates in March and December, given steady job creation and some signs of mounting price pressures - and amid the wave of optimism in the early days of President Donald Trump's term, with his promises of tax cuts and big infrastructure spending.
The minutes of the Fed's March meeting, which were released April 5, indicated that policymakers believed the time had almost come to begin shrinking the central bank's bloated balance sheet, which would act as a monetary tightening.
The decision to hold its benchmark interest rate target at 0.75 percent to 1 percent was widely expected with the Federal Open Market Committee voting unanimously on the issue. "All we need is a late flurry of data in May and then the Fed, if it sees a window, will hike in June".
Several analysts said the statement clears the way for the U.S. central bank to lift rates next month, although that partly depends on USA data. A stimulus package could speed up the pace of hikes.
The dollar soared to a 14-year-high after Mr. Trump's election as investors bet his fiscal stimulus and tax reform proposals would boost the US economy.
Still, a change in the Fed's statement regarding its reinvestment policy would be somewhat unexpected on Wednesday, because the March minutes indicated that "the committee would continue its deliberations on reinvestment policy during upcoming meetings".
Investors now placed a 94 percent chance of a rate hike at the Fed's June 13-14 meeting, up from roughly 70 percent ahead of the release of the Fed's statement, according to an analysis of Fed funds rate futures.
"The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal", the central bank said in a statement. So-called core personal consumption expenditures increased at a 2 percent pace during the first three months, according to a government report Friday, though the core Consumer Price Index number showed a slight monthly decline in March.
A June hike is now 65 percent priced in by markets, according to Reuters data.
Companies continued to hire at the start of 2017, averaging 178,000 net new jobs a month in the first quarter, and wage growth has begun to move up, suggesting tightness in the labor market.