The dollar was largely rangebound on Wednesday, though remained weighed down by dovish Federal Reserve comments, as traders awaited the central bank's policy meeting minutes due later in the day for more clues on its interest rate outlook.
A slew of Fed officials have signalled in recent days that the U.S. central bank may not need to tighten monetary policy much further than initially thought.
Atlanta Fed Bank President Raphael Bostic said on Tuesday the central bank did not need to raise borrowing costs any further, and Minneapolis Fed President Neel Kashkari followed with similar remarks later in the day.
The greenback sat near a two-week low against a basket of currencies on Wednesday and last stood at 105.80 .
Sterling rose to a three-week high of $1.23035, while the euro last bought $1.0604, not far from Tuesday's more than two-week top of $1.0620.
"The Fed is shifting away from further rate hikes, and its tightening bias too may be dropped by December," said Thierry Wizman, Macquarie's global FX and interest rates strategist.
U.S. Treasury yields have similarly tracked lower following the dovish Fed comments, with the two-year yield , which typically reflects near-term rate expectations, hitting a one-month low of 4.9260% on Tuesday. It was last at 4.9990%.
The benchmark 10-year yield stood at 4.6407%.
The focus now turns to minutes of the Fed's September policy meeting out later on Wednesday, which could offer further clues on its interest rate outlook. U.S. inflation data is due the next day.
"I think markets will be particularly interested in whether or not the (Federal Open Market Committee) will follow through with the extra 25-basis-point hike forecast in (its) latest dot plot," said Carol Kong, a currency strategist at Commonwealth Bank of Australia (CBA).
"Any comments that are perceived to be slightly dovish, I think the unwind of yields can continue and that can weigh down on the U.S. dollar more."
