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Dollar Remains Broadly Lower with Fed in Focus

Dollar index still on the downside in cautious trade - The U.S. dollar remained broadly lower against other major currencies on Wednesday, as investors remained cautious ahead of the Federal Reserve's monthly policy decision due later in the day.

The greenback moved lower following U.S. President Donald Trump's first State of the Union address late Tuesday.

Amid positive comments on what the U.S. President described as a "New American Moment" characterized by prosperity, rebuilding and cooperation, Donald Trump also underlined the need to end participation in large, multilateral treaties, as well as in unfair trade practices by other nations.

Trump also urged Congress to pass legislation to stimulate at least $1.5 trillion in new infrastructure spending.

Market participants were now looking ahead of the Fed's monetary policy statement due later Wednesday, with hopes the central bank will give more hints on the pace of future rate hikes.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.25% at 88.80 by 05:15 a.m. ET (19:15 GMT), remaining within close distance of last week's three-year lows of 88.25.

EUR/USD was up 0.40% at 1.2452, while GBP/USD held steady at 1.4137.

Earlier Wednesday, data showed that euro zone consumer price inflation rose by 1.3% in January, in line with expectations and compared to a 1.4% advance in the prior month.

The yen was little changed, with USD/JPY at 108.73, while USD/CHF slid 0.43% to 0.9317.

Elsewhere, the Australian and New Zealand dollars were stronger, with AUD/USD up 0.17% at 0.8097 and with NZD/USD advancing 0.91% to 0.7397.

Meanwhile, USD/CAD declined 0.36% to trade at 1.2289.

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