The US dollar fell on Wednesday before the Federal Reserve is expected to raise rates for the likely last time this cycle, which could lead to further dollar declines.
Investors worry that continued rate hikes will weigh on the economy, and markets expect further rate hikes to lead to recession.
"There is every indication and every expectation that the Fed will hike today and then it will pause," said financial analyst Joseph Trevisani.
A 25 basis point increase on Wednesday would put the fed funds rate between 5% and 5.25%, and Fed officials had previously said 5.1% was the year-end target, Trevisani said, adding that inflation had also eased and was likely to continue to decline amid concerns economy.
Data on Tuesday showed US job openings fell for a third straight month in March and layoffs hit their highest level in two years, suggesting a slowing labor market could accelerate the Fed's efforts to fight inflation.
The dollar bounced briefly after data on Wednesday showed that US private employers increased hiring in April. The NFP employment report will be released on Friday.
The US dollar index measures the U.S. currency. compared to the other six currencies decreased 0.54% to a trading level of 101.180.
Concerns that Congress might delay raising the debt ceiling and risk a default could also make the Fed less likely to continue raising rates after May. Analysts said the Fed may be hesitant to completely rule out further hikes on Wednesday and seek to keep its options open should inflation pick up again.
