07:44 AM EDT, 03/20/2024 (MT Newswires) -- The US dollar rose against its major trading partners early Wednesday as markets anticipate the Federal Open Market Committee will leave the target range for the federal funds rate at 5.25% to 5.50% in its statement due for release at 2:00 pm ET, focusing attention on any changes in the statement, the updated Summary of Economic Projections and Federal Reserve Chairman Jerome Powell's press conference at 2:30 pm ET for clues about the future policy path.

Some analysts forecast the median expectation for rate reductions this year will shift to two cuts from the three forecast in the December SEP update, mostly due to a later start to loosening policy. At the same time, though, markets continue to price in three cuts by the end of the year, with some outliers looking for as many as five cuts.

Earlier Wednesday, the Mortgage Bankers Association said mortgage applications declined for both refinancing loans and purchases in the week ended March 15. Mortgage rates rose for the first time in three weeks as concerns about inflation were elevated by the stronger-than-expected February data.

Weekly energy stocks data are set to be released at 10:30 am ET.

A quick summary of foreign exchange activity heading into Wednesday:

EUR-USD fell to 1.0843 from 1.0866 at the Tuesday US close and from 1.0844 at the same time Tuesday morning. Eurozone construction output rose at a slower pace in January, data released earlier Wednesday showed, while Eurozone consumer confidence data for March is set to be released at 11:00 am ET. European Central Bank President Christine Lagarde said earlier Wednesday that the first rate cut by the ECB, which some officials have suggested could be in June, would not necessarily be followed by a string of reductions, Reuters reported. The next ECB meeting is scheduled for April 11.

GBP-USD fell to 1.2695 from 1.2722 at the Tuesday US close but was up from a level of 1.2684 at the same time Tuesday morning. UK consumer price index data released overnight indicated a smaller rebound than expected in February after a January decline, slowing the year-over-year inflation rate for both overall and core CPI. The next Bank of England meeting is scheduled for Thursday when no change in interest rates is expected.

USD-JPY rose to 151.6752 from 150.8663 at the Tuesday US close and 150.4282 at the same time Tuesday morning. Wednesday is a holiday in Japan, so no data were released overnight. The next Bank of Japan meeting is scheduled for April 25-26.

USD-CAD rose to 1.3601 from 1.3567 at the Tuesday US close and 1.3568 at the same time Tuesday morning before the softer-than-expected Canadian consumer price index data were released for February. There are no Canadian data on Wednesday's schedule. The next Bank of Canada monetary policy meeting is set for April 10.