Investing.com – The U.S. dollar was virtually unchanged on Tuesday, with investors fearful ahead of the Federal Reserve’s latest interest rate-setting meeting.

At 05:10 ET (09:10 GMT), the dollar index, which tracks the U.S. currency against a basket of six other currencies, was slightly higher at 104.342, trading in a narrow range.

Dollar composed ahead of Fed meeting

The two-day monetary policy meeting will begin delayed Tuesday evening. Interest rates are expected to remain unchanged when it ends the following day.

The US central bank is widely expected to leave interest rates unchanged this week, but investors will be looking for hints from the Federal Reserve chairman on how quickly policymakers will be prepared to cut rates at his news conference.

Low inflation readings and dovish comments from Federal Reserve officials have led markets to boost bets that a 25 basis point rate cut will be in September.

Powell also has scheduled a meeting with central bankers in August, as the Federal Reserve will not meet this month, to further steer the market. However, the lack of a clear signal of a rate cut in September this week will likely lead to a strengthening of U.S. Treasury yields and the dollar.

Pound weakens on BOE uncertainty

In Europe, the rate fell slightly to 1.2857 ahead of Thursday’s meeting.

There is much uncertainty surrounding the meeting as key decision-makers have not spoken publicly for more than two months due to rules in place in the run-up to the general election earlier this month.

Policymakers face a choice between higher-than-expected services inflation and feeble economic growth, with an unchanged verdict emerging as the favourite.

rose 0.1% to 1.0829 after mixed growth data for the euro zone.

In the second quarter, growth was slightly faster than expected, at 0.3% compared to the end of June, i.e. within three months.

However, this relatively good news was overshadowed by a surprise second-quarter decline of 0.1% compared with the previous three-month period.

Yen gives back some of the profits

In Asia, the yen rose 0.5% to 154.78, with the yen giving back some recent gains ahead of Wednesday’s meeting.

Analysts are divided on whether the central bank will keep interest rates unchanged or agree to a 10-15 basis point hike.

But beyond interest rates, the BOJ is widely expected to send hawkish signals, signaling an end to its quantitative easing policy. The central bank said at its June meeting that it would outline plans to gradually phase out asset purchase programs in July.

fell 0.1% to 7.2496, remaining close to an eight-month high on continuing concerns about a slowdown in the country’s economic growth.