Jul 27, 2022 03:00AM ET
By: AnalysisWatch
On Wednesday, the dollar fell slightly as traders prepared for the important Federal Reserve decision later in the day.
The dollar index, which measures the greenback against other major currencies, was down 0.14 percent at 107.04 as of 2:34 a.m. EDT.
The level is not far from its two-year high of 109.290, which was reached earlier this month.
Investors are waiting to see how much the U.S. central bank will fight inflation as concerns remain that aggressive rate hikes by the Fed will weigh on growth instead.
Policymakers are weighing consumer prices hitting a 40-year high along with a recent serving of weak economic data.
On Tuesday, U.S. consumer confidence fell to its lowest in almost a year and a half, and new home price growth and new home sales slowed.
Markets have largely priced in a 75 basis point increase, with little likelihood of a 100 basis point jump.
Focus will turn to comments from Fed Chairman Jerome Powell, who is expected to speak at a press conference at 1830 GMT on Wednesday.
Meanwhile, the euro recovered some of its ground against the dollar after falling 1% overnight to $1.0108, the sharpest decline since July 11.
The common currency rose 0.19% to $1.0137 in early morning European trading.
Sentiment around the euro was weighed down by concerns that broader European economic activity could be affected by a reduction in Russian gas supplies.
Flows west of the key Nord Stream 1 pipeline fell on Tuesday and are expected to fall further on Wednesday.
The pound strengthened slightly against the dollar as another Bank of England interest rate decision is expected next week.