Dollar at 6-week high: The Dollar remained close to a six-week peak against major currencies on Wednesday, as investors solidified their expectations that the Federal Reserve would take a measured approach to interest rate cuts amidst a resilient US economy.

While the US Dollar index, tracking the currency against major rivals, held steady at 103.48, the Japanese yen saw a slight uptick following hawkish comments from the Bank of Japan, hinting at a possible stimulus exit as early as March.

On Tuesday, the US rate futures market suggested a 47 per cent likelihood of a March rate cut, down from the recent peak of 80 per cent two weeks ago. 

Traders are now betting on five quarter-point rate cuts for 2024, compared to the previous expectation of six.

Federal Reserve officials, in their last comments before a blackout period ahead of the January 31 policy decision, stressed that monetary policy is in a "good place," dispelling notions of imminent rate cuts. This has led to a correction in markets, pushing the Dollar higher.

James Kniveton, senior corporate FX dealer at Convera, noted that central banks globally are resisting rapid moves towards reducing inflation, with both the Federal Reserve and the European Central Bank (ECB) pushing back on rate cut expectations.

The ECB is set to decide on policy on Thursday, and while no change in interest rates is anticipated, investors will scrutinise the statement and ECB Chief Christine Lagarde's press conference for insights into future rate movements.

The euro held steady at $1.08565, rebounding from Tuesday's low of $1.0822, while the British pound slightly rose to $1.2694 after a minor overnight dip of 0.2 per cent. 

The Bank of England is scheduled to announce its policy decision on February 1.

In Asia, the Japanese yen gained ground as the Bank of Japan kept stimulus settings unchanged, but signalled a potential end to negative rates in April or even March. 

The Dollar dipped to 148.085 yen after a volatile session.

The Bank of Canada is expected to maintain its key overnight rate at 5 per cent, a 22-year high, during its policy meeting on Wednesday. The greenback held steady at C$1.3462.

China's yuan remained stable in offshore trading at 7.1660 per Dollar, close to a two-week high, as reports surfaced that Chinese policymakers are contemplating a 2 trillion yuan ($278.86 billion) stabilisation fund to support the struggling stock market.

Meanwhile, the cryptocurrency bitcoin steadied above $40,000 after reaching as low as $38,505 on Tuesday. 

The recent sell-off followed the approval of the US's first spot bitcoin exchange-traded fund (ETF), with traders unwinding bullish positions after an initial surge to a record $49,048 on January 11.

(With Reuters Inputs)