LONDON—The dollar edged further away from recent 20-year highs on Wednesday ahead of the U.S. Federal Reserve policy meeting, at which the central bank is expected to raise rates by another 75 basis points to tame soaring inflation.
But moves in currency markets were modest as traders await the policy announcement at 1800 GMT.
Money markets are betting that the Fed will raise rates by 75 basis points (bps), with an outside chance of a larger 100 bps hike. Traders expect the Fed to take the rate to as high as 3.4 percent by year-end to help bring inflation back to target.
Bets on oversized rate hikes helped push the dollar index, which measures the dollar against a basket of six currencies, to its highest level in almost 20 years earlier this month at 109.29, with the greenback currently up 2.1 percent in July….