Investing.com - The dollar edged higher against the other major currencies on Wednesday, as markets awaited the Federal Reserve's highly anticipated policy decision due later in the day.
USD/JPY rose 0.27% to 121.01.
Most investors expect the U.S. central bank to raise interest rates for the first time since June 2006 at the conclusion of its meeting on Wednesday.
Higher interest rates would make the U.S. dollar more attractive to yield-seeking investors in the long run, but a rate hike could also trigger dollar selling in the immediate aftermath.
With a rate hike priced in investors are now focusing on how quickly the Fed will tighten monetary policy in 2016. The Fed has indicated that the pace of rate hikes will be gradual.
EUR/USD eased 0.10% to 1.0921.
Eurostat said euro zone consumer price inflation rose 0.2% last month, up from a preliminary estimate of 0.1%. Euro zone inflation rose by 0.1% in October.
The rate has now been below 1% for 26 straight months, well under the European Central Bank's target of near but just under 2%.
The report came after research group Markit said its Flash Euro Zone Composite Output Index, which measures the combined output of both the manufacturing and service sectors, eased down from 54.2 in November to 54.0 in December, below forecasts for 54.2.
Earlier Wednesday, Markit said its preliminary German manufacturing PMI inched up to 53.0 this month from a final reading of 52.9 in November, while the preliminary services PMI dipped to 55.4 from 55.6.
In France, the preliminary services PMI fell to an 11-month low of 50.0 this month, from 51.0 in November, while the manufacturing PMI inched up to a 21-month high of 51.6 from 50.6.
Elsewhere, the dollar was higher against the pound, with GBP/USD down 0.14% at 1.5017 and was lower against the Swiss franc, with USD/CHF slipping 0.16% to 0.9899.
Sterling weakened after the Office for National Statistics said average earnings, excluding bonuses, rose just 2.0% in the three months to October, slowing from growth of 2.4% in the previous month.
Wages, including bonuses, rose 2.4% down from 3.0% in the previous month.
The U.K. unemployment rate fell to 5.2%, the lowest level since January 2006, from 5.3% in the three months to September.
The number of people unemployed fell by 110,000, the biggest decline since the three months to September of last year, the ONS said.
The Australian dollar was steady, with AUD/USD at 0.7189, while NZD/USD fell 0.21% to 0.6750.
Meanwhile, USD/CAD rose 0.20% to trade at 1.3761, just below Monday's 11-1/2 year peak of 1.3781.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.12% at 98.33.