The U.S. dollar drifted higher against its most major counterparts in the European session on Wednesday, as investors looked to the monetary policy announcement by the Federal Reserve that could hint at a liftoff in interest rates as early as March.

The Fed ends its two-day policy meeting later today, with investors watching for hints about the timing and pace of rate hikes for this year.

Markets are pricing in a quarter-point hike in March, when it concludes the tapering of its bond buying program.

The conflict between Russia and Ukraine further boosted the demand for the safe-haven currency.

On Tuesday, Russia conducted new military exercises near Ukraine involving 6,000 troops, which included firing exercises with fighter jets, bombers, anti-aircraft systems and ships from the Black Sea and Caspian fleets.

The USD/CHF pair touched a 2-week high of 0.9207 from Tuesday's close of 0.9181. The greenback is seen finding resistance around the 0.94 mark.

The greenback spiked up to a 6-day high of 114.24 against the yen, up from yesterday's close of 113.86. Next key resistance for the greenback is likely seen around the 116.00 level.

The greenback edged higher to 1.1276 against the euro, from a low of 1.1311 seen at 9:30 pm ET. On the upside, 1.10 is possibly seen as the next resistance level for the greenback.

On the other hand, the greenback fell against the pound, as the risk-on mood supported high-yielding currencies.

The greenback weakened to a 2-day low of 1.3523 against the pound, reversing from a high of 1.3484 it touched in the previous session. Next key support for the currency is possibly seen around the 1.37 level.

The greenback dropped to 0.6698 against the kiwi and a session's low of 0.7177 against the aussie, compared to Tuesday's closing quotes of 0.6684 and 0.7148, respectively. The next possible support for the greenback is seen around 0.70 against the kiwi and 0.75 against the aussie.

The greenback declined to a 2-day low of 1.2560 against the loonie, as the latter firmed ahead of the Bank of Canada's interest rate decision. The greenback may challenge support around the 1.24 level.

Looking ahead, U.S. wholesale inventories, advance goods trade balance and new home sales, all for December, are due in the New York session.

The Bank of Canada will announce its interest rate decision at 10:00 am ET. The BoC is widely expected to keep its policy rate steady at 0.25 percent.

At 2:00 pm ET, the Fed announces its decision on interest rate. Economists widely expect the federal funds rate to be kept at 0-0.25 percent.

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