The dollar slid against a currency basket on Wednesday as investors awaited the conclusion of the Federal Reserve’s two-day policy meeting.
The Fed is widely expected to raise interest rates for the second time this year at its meeting and with a rate hike almost fully priced in market participants will be focusing on whether the central banks plans to speed up the pace of rate hikes this year.
Data earlier Wednesday pointing to an increase in producer prices last month underlined expectations that inflation will continue to pick up this year, a day after a report showing a moderate increase in consumer prices in May.
The euro was higher against the dollar, with EURUSD trading at 1.1771 as traders looked ahead to Thursday’s European Central Bank meeting amid speculation that the bank could signal its intention to start unwinding its bond purchasing program.
The dollar was little changed against the yen, with USDJPY last at 110.39 after rising to a three-week high of 110.72 earlier.
The pound was a touch lower against the U.S. currency, with GBPUSD sliding to 1.3361 after data showing that UK inflation remained steady at a one-year low on May, despite pressure from higher oil prices.
The disappointing inflation data weakened the case for a rate hike by the Bank of England in August.
In emerging markets, the dollar was higher against the Turkish lira and lower against the South African rand ahead of the looming Fed hike.