The dollar index, which measures the currency against a basket of six rivals, was down 0.51% to 97.148. The drop slowed however as the market digested the news and some initial losses were retraced.
Against the euro, the dollar was down 0.46% to $1.124 , and against the pound it was down 0.8% to $1.267.
In response to the announcement, investors moved money out of safe-haven assets like the dollar and U.S. Treasuries and into stocks.
President Donald Trump said on Tuesday he would have an extended meeting with Chinese President Xi Jinping at the Group of 20 summit later this month, raising hopes they can ease tensions in a trade dispute that has damaged the world economy.
U.S. Trade Representative Robert Lighthizer on Wednesday said he and U.S. Treasury Secretary Steven Mnuchin will likely meet Chinese Vice Premier Liu He ahead of the G20 summit in Japan later this month.
UBS Wealth Management said that the dollar could rise against the yen if the Fed were less dovish than expected or the G20 summit ends with a temporary U.S.-China trade war truce
“A bounce toward 110 would make adding short USDJPY positions attractive,” UBS said. “We expect USDJPY to grind lower as U.S. growth slows and as U.S.-China trade tensions persist.”
The yen stood little changed at 108.13 yen per dollar.