The U.S. dollar fell against its major counterparts in the New York session on Wednesday, as the nation's producer prices decreased more than expected in May, cementing hopes of a rate pause by the Federal Reserve when it announces its monetary policy decision later in the day.

Data from the Labor Department showed that the producer price index fell by 0.3 percent in May after inching up by 0.2 percent in April. Economists had expected producer prices to edge down by 0.1 percent.

The report also showed the annual rate of producer price growth slowed to 1.1 percent in May from 2.3 percent in April. The rate of growth was expected to decelerate to 1.5 percent.

Investors focus on the Fed's monetary policy decision, due out at 2:00 pm ET.

While the Fed is widely expected to leave interest rates unchanged, traders will pay close attention to the accompanying statement for clues about the outlook for rates.

The greenback fell to more than a 1-year low of 1.2692 against the pound and more than a 3-week low of 0.8969 against the franc, off its early highs of 1.2600 and 0.9060, respectively. The next possible support for the currency is seen around 1.30 against the pound and 0.88 against the franc.

The greenback weakened to near a 4-week low of 1.0844 against the euro and more than a 4-month low of 1.3275 against the loonie, from its early highs of 1.0773 and 1.3319, respectively. The greenback is likely to find support around 1.10 against the euro and 1.30 against the loonie.

The greenback fell to near a 4-month low of 0.6832 against the aussie and a 3-week low of 0.6225 against the kiwi, reversing from its early highs of 0.6762 and 0.6142, respectively. The currency may locate support around 0.71 against the aussie and 0.645 against the kiwi.

The greenback was down against the yen, at 139.40. If the currency falls further, 134.00 is likely seen as its next support level.

At 2:00 pm ET, the Fed announces its decision on interest rate. Economists widely expect the Fed to hold the policy rate steady at 5.00 percent to 5.25 percent.

US Dollar vs CAD (FX:USDCAD)
Forex Chart
From Jun 2024 to Jul 2024 Click Here for more US Dollar vs CAD Charts.
US Dollar vs CAD (FX:USDCAD)
Forex Chart
From Jul 2023 to Jul 2024 Click Here for more US Dollar vs CAD Charts.