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

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

The dollar index - which gauges the dollar against the euro, yen and four other counterparts - was steady at 103.82 following a 0.31% drop overnight.

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

In particular, 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 2024.

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

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

"The Fed hasn't 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 Fed does push back tonight on those rate cut expectations, the dollar index may have an opportunity move back into the October range of 105-107."

Later this week the European Central Bank, Bank of England, Norges Bank and the Swiss National Bank also decide policy, with Norway considered the only one which could potentially raise rates. There is also a risk the SNB could dial back its support for the franc in FX markets.

The Bank of Japan's policy meeting comes next week, and the yen has been volatile on speculation the central bank is drawing close to ending negative rate policy. Building hopes that this may occur next Tuesday were dashed after Bloomberg reported this week that BOJ officials see little need to rush to the exit.

The antipodean currencies ticked up against the dollar, with the Aussie adding 0.09% to $0.6565, and New Zealand's currency rose 0.07% to $0.6139.

Meanwhile, leading cryptocurrency bitcoin continued to consolidate around $41,350 after pulling back from the highest since April 2022 at $44,729, reached on Friday.