Dollar gains

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    TOKYO- The US dollar held gains against major currencies on Wednesday as investors looked to the US Federal Reserve’s policy meeting for indications it could start rate hikes earlier or let bond yields rise further.

    Against the yen, the greenback firmed 0.1 percent to 109.085 yen, hovering near nine-month highs hit this week. The euro was flat versus the dollar after declining in the past three sessions.

    With Fed policymakers expected to forecast the fastest US economic growth in decades in the wake of COVID-19 vaccinations and $1.9 trillion in new stimulus, market participants will be focused on cues that the central bank could start raising interest rates in 2023, earlier than it had said.

    “It is likely that the FOMC’s economic forecasts will acknowledge the improved growth picture this year, but will continue to show a long road toward conditions consistent with maximum employment that would put sustained pressure on inflation,” Morgan Stanley strategist Matthew Hornbach said.

    “The Fed being more dovish than expected would suggest US yields and the dollar moving lower in the near term, particularly against risk currencies, but we continue to see upside risks for USD into 2Q.”

    The dollar index stood at 91.908, having risen for three straight sessions on support mainly from elevated US bond yields.

    The euro changed hands at $1.1902, but the common currency could test last week’s 3 1/2-month low of $1.18355 on a possible delay in vaccinations.