Dollar holds firm as Fed hike expectations keep markets focused

The US Dollar remained firm on Wednesday, trading near multi-week highs against several major currencies as markets awaited the Federal Reserve's policy decision.

Markets were pricing around a 90% chance of a 25-basis-point rate increase. The Dollar has also benefited from higher Treasury yields, while elevated energy prices have kept inflation concerns in focus.

The Fed's updated projections and guidance will be important for currency markets because traders are assessing whether another rate increase could follow later in the year.

Major pairs including EUR/USD and USD/JPY could react sharply to changes in the Fed's rate outlook and comments from policymakers.