The dollar eased moderately Wednesday as investors were reluctant to extend recent gains for the U.S. currency ahead of the Federal Reserve’s afternoon interest-rate decision, and any potential clues on the aggressiveness of Fed rate hikes from here. The ICE U.S. Dollar Index DXY, -0.17% , a measure of the greenback against a basket of six currencies, fell 0.1%. The dollar fell against Europe’s shared currency. The euro EURUSD, +0.1788% was at $1.0644, up from $1.0628 late Tuesday in New York. Against its Japanese counterpart, the dollar USDJPY, -0.23% was at ¥114.92, from ¥115.18. The dollar did improve against its U.K. rival. The British pound GBPUSD, +0.1343% was at $1.2649, compared with $1.2658. The prospects of U.S. President-elect Donald Trump’s fiscal stimulus and a higher yield environment had driven the dollar sharply higher since the U.S. elections in early November. Market participants aggressively factored in stronger U.S. growth and more rate increases from the Fed, including one at this week’s meeting. Still, questions remain over how aggressively the Fed will raise rates in coming months. A stronger dollar and higher borrowing costs could cool economic activity, potentially reducing the need for the Fed to tighten monetary conditions quickly. Read: Message to Yellen: Don’t dodge questions on Trump stimulus plans Some market participants also think optimism over Trump’s new economic policies could wane once the new administration starts running and implementing plans. “You don’t need to increase rate-rise projections based on expectations,� said Akira Moroga, joint general manager of market products division at Aozora Bank. He said Fed officials would likely assess economic conditions as new policy measures are put in place. The euro appears to be recovering in recent session despite European Central Bank’s recent pledges to continue its easing path. Aozora’s Moroga said concerns have abated somewhat about European banking and politics, helping the euro gain modestly.

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