RTTNews - The dollar was looking for direction Wednesday morning as traders await the latest monetary policy decision from the Federal Reserve at the conclusion of its FOMC meeting.

While interest rates will likely be kept unchanged, the Fed's outlook for the economy will be on traders' radar.

The interest rate call will be announced at 2.15 p.m ET. Traders will be keen to read between the lines regarding the health of the economy which is showing definite signs of bottoming out.

Trade gap data for June is slated for release at 8.30 a.m. ET and the Treasury Budget for the month of July at 2.00 p.m. ET. Economists expect that trade gap for June at $28.5 billion and Treasury Budget for July to show a deficit of $180 billion.

The dollar extended its gains from the previous sessions versus the euro overnight, reaching a 2-week high of 1.4085 before dropping back nearly a cent.

Wednesday, the Eurostat said in a report that the Eurozone industrial production decreased 17% year-over-year in June, compared to the 17.6% fall in May, revised from 17% decline reported initially. Economists were looking for a decline of 16.4%.

The dollar also hit a new two-week high versus the sterling, rising to 1.6389 before leveling off. Last week, the dollar tumbled to 2009 lows versus the euro and sterling, but has since rallied as the steam came out of the summer stock rally.

Wednesday, the Bank of England said in its latest quarterly Inflation Report that the CPI inflation is likely to drop further below target in the coming months.

Downward pressure from the margin of spare capacity signals inflation is more likely to stay below target in the medium term than above, the bank said.

The dollar extended its week-long run to the upside versus the loonie, reaching a 3-week high of C$1.1076. With the advance, the dollar moved further away from a 10-month low of C$1.0630, set earlier this month.

Versus the yen, the dollar firmed up to 95.70, paring some is losses from the last few sessions. Yesterday, the Bank of Japan held steady on its key interest rate, as expected.

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