The U.S. dollar edged higher on Wednesday, trading within narrow ranges as markets awaited the outcome of the Federal Reserve’s latest policy meeting and digested news of renewed trade negotiations between the U.S. and China.

At 04:45 ET (08:45 GMT), the U.S. Dollar Index, which tracks the greenback against a basket of six major currencies, was up 0.2% at 99.225, rebounding after a series of steep losses earlier in the month.

Dollar Finds Support on Trade Developments

The greenback received a modest boost following reports that Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer are scheduled to meet China’s top economic official in Switzerland on Saturday. The announcement has rekindled hopes of easing trade tensions between the world’s two largest economies.

The dollar had previously come under significant pressure in April after President Donald Trump rolled out his “reciprocal” tariff strategy, targeting key trading partners—including China.

While a comprehensive trade deal remains a longer-term prospect, the mere resumption of dialogue has helped stabilize the dollar for now.

“In April, the yen and Swiss franc gained the most from the spike in trade tensions and broad selling of U.S. assets. With talks back on the table, we expect USD/JPY and USD/CHF to lead the dollar’s rebound,” analysts at ING wrote in a client note.

Still, upside potential remains capped ahead of the Fed’s policy decision later today.

Market Eyes Fed Comments for Economic Signals

The Federal Reserve is widely expected to leave interest rates unchanged. As a result, investor attention will turn to Chair Jerome Powell’s remarks for insights into the central bank’s outlook, particularly regarding the economic impact of the Trump administration’s trade agenda and the likely path of future rate moves.

“We don’t anticipate major surprises,” said ING. “The Fed continues to push back against political pressure to cut rates. Markets seem content to wait for a likely rate cut in July, pending confirmation from upcoming economic data.”

Euro Holds Ground Despite German Political Surprise

In Europe, the euro was little changed, with EUR/USD trading at 1.1367. German industrial orders surprised to the upside in March, rising 3.6%—the first increase this year and stronger than expected.

The single currency briefly dipped after Friedrich Merz was confirmed as Germany’s new chancellor on his second attempt Tuesday, marking the first time in postwar history that a chancellor candidate failed to win a first-round parliamentary vote.

“EUR/USD dipped to 1.1310 following the initial political shock, but has since shown resilience,” ING noted.

Sterling Softens Ahead of BoE Decision

GBP/USD slipped 0.2% to 1.3352, with traders cautious ahead of the Bank of England’s upcoming policy meeting. Markets broadly expect the central bank to cut rates by 25 basis points.

Yuan Eases After PBOC Policy Moves

The USD/JPY climbed 0.6% to 143.33, as safe-haven demand for the yen waned amid renewed U.S.-China trade dialogue.

Meanwhile, the USD/CNY edged up 0.1% to 7.2257 after the People’s Bank of China announced a 10-basis point cut to its benchmark repurchase rate, lowering it to 1.40%. Additionally, the central bank reduced the reserve requirement ratio by 50 basis points to 6.2%.

The policy adjustments are aimed at injecting further monetary support into China’s economy, which continues to face pressure from the ongoing trade dispute with the United States.