The US dollar pared losses before retreating again on Wednesday after the Treasury Department announced a threefold expansion of its long-dated debt buyback program. The Bloomberg Dollar Spot Index slipped 0.1% to 1186.48, reflecting investor disappointment as the actual scale of the increase fell short of more aggressive expectations.

The Treasury raised the size of its next longer-dated bond repurchase operation to $6 billion, a figure largely in line with typical dealer forecasts. "While the buyback increase aligns with consensus, market participants had leaned toward a potentially larger outcome, which suggests the dollar could see modest gains as traders gradually price out the possibility of an outsized expansion," noted Noah Buffam of Canadian Imperial Bank of Commerce.

USD/JPY declined 0.3% to 153.49, with the yen strengthening as Treasury Secretary Scott Bessent issued a direct challenge to traders, daring them to oppose his efforts to boost the Japanese currency. He stated bluntly that his market operations are now backed by insider knowledge, adding a layer of certainty to his interventions.

EUR/USD edged up 0.1% to 1.1635, while USD/CAD rose 0.1% to 1.3803. The move came as the US escalated its trade dispute with Canada following retaliatory tariffs, banning certain product imports, imposing new levies on others, and seeking to bar Canadian firms from supplying government contractors.