Forexpros – The U.S. dollar was lower against most of it major counterparts on Wednesday, after political leaders in Greece reached an agreement on the formation of a government, while markets looked ahead to a policy announcement from the Federal Reserve.

During European afternoon trade, the dollar was lower against the euro, with EUR/USD rising 0.16% to hit 1.2704.

Market sentiment was boosted after Evangelos Venizelos, the head of Greece’s Pasok party, announced that a coalition government had been formed, which will allow Athens to resume negotiations with creditors on its international bailout deal.

The euro also remained supported ahead of the outcome of the Fed’s policy setting meeting, amid speculation that the U.S. central bank may implement a third round of quantitative easing measures after a recent string of disappointing economic data.

The greenback was also weaker against the pound, with GBP/USD climbing 0.25% to hit 1.5764.

The pound fell to a session low against the greenback earlier after the minutes of the Bank of England’s June meeting showed that four policymakers, including central bank Governor Mervyn King, voted in favor of approving another round of quantitative easing this month, while five voted against.

Meanwhile, official data showed that the number of people claiming unemployment benefits in the U.K. rose to 8,100 in May, defying expectations for a decline of 3,000.

The U.K. unemployment rate held steady at 8.2%, in line with expectations.

Elsewhere, the greenback slid lower against the yen and the Swiss franc, with USD/JPY dipping 0.02% to hit 78.90 and USD/CHF sliding 0.17% to hit 0.9450.

In Switzerland, a report showed that investor sentiment plunged to its lowest level in five months in June, amid worries over the ongoing sovereign debt crisis in the euro zone.

The Centre for European Economic Research (ZEW) said its indicator of Swiss economic sentiment tumbled to minus 43.4 in June from a reading of minus 4.0 the previous month. Analysts had forecast a reading of minus 15.0.

The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD losing 0.10% to hit 1.0167, AUD/USD easing up 0.11% to hit 1.0199 and NZD/USD dipping 0.02% to hit 0.7880.

Earlier Wednesday, official data showed that New Zealand’s current account deficit widened to NZD2.8 billion in the first quarter, against expectations for a deficit of NZD1.1 billion as dairy export prices and oil exports fell and the nation imported more fuel.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.17%, to trade at 81.48.

The Federal Reserve’s policy announcement was to be followed by a closely watched press conference with Fed Chairman Ben Bernanke, to discuss the bank’s decision.