The dollar settled near its lowest level in five weeks on Wednesday, ahead of the conclusion of the Federal Reserve's monetary policy meeting (the US central bank), as investors waited for a clearer picture on the path the central bank is likely to take in the wake of global banking turmoil.

Investors' eyes are focused on whether the US central bank will adhere to a policy of monetary tightening to combat stubborn inflation, or will it temporarily stop raising interest rates in light of the problems that banks have faced recently, including bankruptcies and bailout packages.

The dollar index, which measures the performance of the US currency against six major currencies, reached 103.19, up slightly from its lowest level in five weeks of 102.99, which it touched last night. The euro reached $1.0770, settling near a five-week high of $1.0789, which it hit overnight.

CME's Videowatch tool showed that markets now expect a 15 percent chance that the Federal Reserve will not raise interest rates, with about an 85 percent chance that it will do so by 25 basis points. Just a month ago, the market was 24 percent expecting a 50 basis point rate hike.

Investor sentiment remained fragile as fears about the future of the banking sector began to recede, following sharp market volatility over the past few weeks that saw the collapse of two US banks earlier this month and the rescue of Credit Suisse earlier this week.

The Federal Reserve closes its meeting on Wednesday and the monetary policy statement is due to be published at 1800 GMT, followed by a half-hour press conference by Federal Reserve Chair Jerome Powell.

The yen rose 0.04 percent to 132.47 yen per dollar, while the pound sterling reached $1.2233 in the latest transaction, up 0.16 percent on Wednesday.

The Australian dollar increased 0.36 percent to $ 0.6694, while the New Zealand dollar gained 0.11 percent, recording $ 0.6199.

As for cryptocurrencies, Bitcoin rose 0.44 percent in the latest transactions to $ 28,276.58, but it was still below its nine-month high recorded on Monday.