The dollar slipped back towards its 6-1/2-month lows on Wednesday, as forex investors' shifted their attention from U.S. politics to monetary policy. Traders digested the release of the minutes of the U.S. Federal Reserve's meeting in early May.
The Fed is holding a $4.5 trillion portfolio, known as its "balance sheet," of mostly government debt it accumulated in the years after the crisis.
According to the FOMC minutes published Wednesday earlier this month, policymakers see a system where it will announce cap limits on how much it will allow to roll off each month without reinvesting. Any amount it receives in repayments that exceeds the cap limit will be reinvested.
The dollar index, was little changed and hovering around 97.35 on this news. Interest rate futures implied traders saw about an 83 percent chance of a rate increase at the Fed's June meeting.
EUR/USD closed near its day's high around 1.1215, as it continues to enjoy a bull run this month on factors including an ebb in French political concerns and upbeat euro zone data.
The side effects of the European Central Bank's unconventional policy tools have remained "contained," so there is no reason to deviate from the policy path already laid down by the ECB, President Mario Draghi said on Wednesday.
Earlier, Moody's Investors Services downgraded China's long-term local and foreign currency issuer ratings by a notch, citing expectations that the financial strength of the world's second-biggest economy would erode in the coming years.
