The dollar edged down to 145.385 yen, adding to its 0.5 per cent loss from the earlier session and it was also slightly lower against the euro at $1.0798, after losing nearly 0.28 per cent

The dollar remained on the back foot versus major rivals on Wednesday, as traders prepared for the conclusion of a Federal Reserve policy meeting and clues on when the Fed will begin cutting interest rates.

The U.S. currency edged down to 145.385 yen in early Asian trading, adding to its 0.5 per cent loss from the earlier session. It was also slightly lower against the euro at $1.0798, after losing nearly 0.28 per cent on Tuesday.

The dollar index was steady at 103.82 after a 0.31 per cent decline overnight.

Fed officials give updated economic and interest rate projections later in the day — after a meeting where analysts and investors expect rates to stay on hold — and investors will focus on how they see the economy holding up.

Particularly, investors will be watching to see if Fed Chair Jerome Powell pushes back against the prospect of interest rate cuts in the first half of next year.

Recent signs have been for a soft landing, but data overnight showed consumer prices unexpectedly increasing in November.

Traders currently price in a quarter point rate cut in May.

The Fed has not said they are cutting rates, they have said they are data dependent, but the market is already acting like rate cuts are baked in, said James Kniveton, senior corporate FX dealer at Convera.

If the Federal Reserve does push back tonight on those rate cut expectations, the dollar index may have an opportunity to move back into the October range of 105-107, Kniveton added.

Later this week the ECB, BoE, Norges Bank and the Swiss National Bank also decide policy, with Norway considered the only one which could potentially hike rates. There is also a risk the SNB could pull back on its support for the franc in forex markets.