OREANDA-NEWS. March 19, 2015. The dollar traded flat on Wednesday ahead of the conclusion of a Federal Reserve meeting expected to take a major step toward lifting interest rates for the first time in almost nine years.

After another surge for the U.S. currency in the past two weeks, markets have largely priced in the Fed dropping its reference to patience on policy, clearing the way for a rate hike as early as June.

Anything less, or an explicit warning from the Fed that the dollar's strength may slow it down on policy moves, would be likely to provoke a sharp retreat in the dollar, although analysts are split on which currencies would benefit most.

"The most crowded positions are short euros, or short Scandinavian currencies so if we don't get the removal of the patience language it would be the dollar against that Europe bloc which would see the most dramatic moves," said Michael Sneyd, a strategist with BNP Paribas in London.

"Our base case is that they will remove patience. If we get that and a measured message on the dollar's impact on inflation then, given the slight retracement we have seen in the first half of this week, I think the dollar will do well."

Against a basket of currencies, the dollar was less than 0.1 percent lower at 99.498, and within spitting distance of its recent 12-year peak of 100.390.

The euro inched up to \\$1.0611, having failed to sustain a modest bounce to \\$1.0651 overnight. Support was seen at \\$1.0551 ahead of the 12-year trough of \\$1.0457.

The Fed's statement is due at 1800 GMT, followed half an hour later by a press conference with Chair Janet Yellen. The central bank will also release members' forecasts for inflation and interest rates, and some analysts suspect the trajectory of future increases could be lowered.

A string of strong payroll reports, and a perceived shift in rhetoric by Yellen and others earlier this month, has left the market increasingly convinced the Fed will raise rates in June or sometime in the third quarter.

Against that is the impact of the dollar's 20 percent rise in the past six months on inflation and the deep-seated concern over growth that has been beaten into central banks over seven barren years for the developed world.

The dollar's recent rise has also hit Wall Street as some U.S. multinationals appear to be feeling pain from it.

"Its not my baseline scenario but I do think there's a risk that they don't remove patience," said George Saravelos, G10 currency strategist with Deutsche Bank in London.

"(If that happened) I think you would definitely see a squeeze on dollar longs but the bigger move would be on currencies like the Turkish lira or South African rand, where people would be encouraged to put carry trades on."

The dollar was also roughly steady at 121.26 yen, mid-way between support at 120.67 and resistance at 122.02.

Sterling was under pressure at \\$1.4759 ahead of a busy session that includes British jobs data, minutes of the Bank of England's last policy meeting and the government's last budget before the election in May.