The dollar is little changed against its major rivals Wednesday morning as the market largely shrugs off U.S. trade data for June and focuses on the Federal Reserve's policy meeting.

The dollar advanced modestly against the euro and the yen and then ceded its small gains in the aftermath of news that the U.S. deficit in international trade of goods and services increased 4% to USD27.01 billion in June from a slightly revised USD25.97 billion in May.

The U.S. dollar trimmed a loss versus the Japanese yen and was little changed against the euro as traders awaited the outcome of the U.S. Federal Reserve's policy meeting later Wednesday.

The dollar was in a stronger position earlier as the euro retreated on risk aversion in overnight trading, dipping to a session low at USD1.4086. Currencies largely edged back toward late Tuesday levels as North American trading progressed, but the dollar retained its strength against the Australian and New Zealand dollars.

Traders note that GBP and the EURO are tracking each other this morning with a bit of risk-off trade keeping pressure on both pairs; overnight equities were slightly higher and may have encouraged some support but most desks report that stops and tech trade likely the main drivers ahead of US FOMC this afternoon.

Market expectation

EURUSD high print was USD1.4195 as a few stops were convincingly flushed above the overnight high, traders says, mentioning those stops were positioned just above USD1.4185 where offers had earlier been reported. Chatter now suggesting a few more stops in place to USD1.4210 but with chatter of offers at USD1.4220, any momentum may be hard to build. Flows described as modest still.

Pound being pulled higher by euro-dollar's extended rally, with euro-sterling taking some of the upside pressure as it edges back toward earlier highs around stg0.8614, with offers remaining in place from this level towards tg0.8620. Cable edges to USD1.6487, moving above earlier reported offers to USD1.6485, traders in recent comments noted offers extending toward USD1.6500.

USDJPY gains extend to JPY96.18 in current action with flows described as light by traders. Little in the way of dollar supply after recent wide swings but the lift seemingly drives in part by short-covering as well as by improved risk-appetite.

The official statement from the central bank's rate-setting Federal Open Market Committee, expected around 2:15 p.m. Eastern, will probably include a clear nod to the improved economic outlook. But few economists think the FOMC will raise interest rates or abandon the easy-money policies credited with avoiding a second depression.

Many economists expect the Fed to allow its program of buying as much as USD300 billion in Treasurys to expire when that amount is reached, likely sometime in September.