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 The U.S. dollar slipped on Wednesday ahead of a closely-watched inflation reading later in the day that will provide clues on the path of Federal Reserve interest rate hikes.

Following last week's solid U.S. jobs data, all eyes are now on the inflation report, with currency moves subdued ahead of the release.

Sterling rose 0.04% to $1.2432 while the euro was last 0.1% higher at $1.0924, with both currencies some distance away from their one-week lows hit on Monday.

Against a basket of currencies, the U.S. dollar index fell 0.05% to 102.07.

"It will be a bit like Friday's nonfarm payrolls, where not much happens until the data, and when the data comes out, you get all sorts of reactions," said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia.

A Reuters poll of economists have forecast headline inflation in March to come in at 5.2% year-on-year, down from 6.0% previously, while core inflation likely ticked higher to 5.6%.

"Powell has said numerous times he wants to see a downtrend in underlying inflation, but the data's not providing that yet. That's why tonight is so important," Capurso said, referring to Fed Chair Jerome Powell.

A raft of Fed speakers on Tuesday offered little guidance on how much further U.S. interest rates would rise, with New York Fed President John Williams saying that the central bank's policy path will depend on incoming data.

Meanwhile, Philadelphia Fed Bank President Patrick Harker said he feels that the end of rate hikes may be near.

Money markets are pricing in a roughly 74% chance that the Fed will raise rates by 25 basis points next month, though multiple rate cuts are also being priced in as early as July through to the end of the year.

Banking turmoil sparked by the collapse of Silicon Valley Bank last month has added to bets that the Fed would not raise rates as high as previously feared in order to ease stress on the sector.

On Tuesday, Chicago Fed President Austan Goolsbee said that the U.S. central bank should be patient about raising interest rates in the face of recent banking sector stress.

Against the yen, the dollar slipped 0.06% to 133.62, though was perched near Monday's one-month high of 133.87 yen, a reflection of the stark contrast between the Fed's aggressive monetary policy tightening cycle and the Bank of Japan's (BOJ) ultra-loose policy.

The International Monetary Fund said in its global financial stability report released on Tuesday that the BOJ could help prevent abrupt policy changes later by allowing more flexibility in its yield curve control policy.

Elsewhere, the Aussie rose 0.07% to $0.6658, while the kiwi gained 0.05% to $0.6195.

In cryptocurrencies, bitcoin was last marginally higher at $30,285, holding above the key $30,000 level after breaching it for the first time in 10 months on Tuesday.

Ether, the second largest cryptocurrency, stood at $1,893.50.