By Scott Kanowsky
Investing.com -- The dollar moved slightly lower on Wednesday, as traders gear up for a crucial Federal Reserve policy decision scheduled for later in the day.
As of 02:34 EST (0634 GMT), the dollar index - which measures the greenback against other major currencies - was down by 0.14% at 107.04. The level is not far off from its two-decade high of 109.290 reached earlier this month.
Policymakers are mulling over consumer prices running at 40-year highs, along with a recent batch of weak economic data. On Tuesday, U.S. consumer confidence tumbled to its lowest mark in almost a year and a half, while new home price growth and sales of new houses both slowed.
Markets have largely priced in a 75 basis point increase, with only a small chance of a jumbo 100 basis point raise. Focus will turn as well to comments from Fed chair Jerome Powell, who is expected to speak at a news conference at 1830 GMT on Wednesday.
Meanwhile, the euro recovered some ground versus the dollar after it declined by 1% overnight to $1.0108 - the sharpest fall since July 11. The common currency rose by 0.19% to $1.0137 in early morning European trading.
Weighing on sentiment around the euro are fears that broader European economic activity may be hit by a reduction in Russian gas supplies. Westward flows out of the key Nord Stream 1 pipeline dropped on Tuesday and are expected to fall further on Wednesday.
Elsewhere, the AUD/USD was holding steady near the flatline ahead of the Fed decision, which is expected at 02:00 EST (1800 GMT). Traders are also eyeing the latest headline inflation data out of Australia , which showed consumer prices rose at their fastest pace in 21 years.
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