Federal Reserve to add more stimulus to spur flagging recovery

The dollar held steady on Wednesday as the Federal Reserve looked set to add more stimulus to spur a flagging recovery, a move analysts said would weigh on U.S. yields and ultimately put more pressure on the greenback.

Traders said the market was unwilling to make new bets ahead of the U.S. central bank's policy decision due at around 1815 GMT, with option expiries expected to dictate price action.

Markets are generally priced for the Fed initially to commit to buying at least $500 billion in Treasuries over five months, although much uncertainty surrounds the scope and pace of bond purchases, Reuters informs.

In early European deals on Wednesday, the euro showed mixed trading against other major currencies as investors remained cautious ahead of the announcement of quantitative easing by the U.S. Federal Reserve later in the day.

While the euro declined against the pound, it recouped late Asian session's loss against the dollar, yen and the franc. The euro thus soared to a 9-day high against the yen, according to RTTNews.