NEW YORK: The US dollar edged lower against major currencies on Wednesday, giving up some of its overnight gains, as traders braced for the Federal Reserve’s much-anticipated decision to cut interest rates.

The US central bank is expected to deliver its first interest rate cut in more than four years at 1800 GMT, with markets pricing a 61% probability of a 50 basis point cut and 39% chance of a 25 basis point cut.

Chair Jerome Powell will hold a press conference shortly after the announcement.

“What we’ve seen so far this week, just looking at the dollar index is that it fell on Monday, it rose by less on Tuesday, and now it’s falling by less so far today,” said Matthew Weller, global head of research at StoneX Retail in Grand Rapids, Michigan.

“That’s sort of the classic pre-key event risk type of pattern when traders aren’t feeling too strongly about committing in either direction.”

Against the Japanese yen, the dollar weakened 0.46% to 141.75 after reaching as high as 142.405 in Asia hours. The Bank of Japan will decide on interest rates on Friday.

The euro strengthened 0.20% against the greenback to $1.11380. The dollar was also down 0.4% against the Swiss franc to 0.844.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.18% to 100.73.

China’s markets resumed trade on Wednesday after the mid-autumn festival break, with the yuan down 0.4% at 7.0824 per dollar in offshore trading.

Sterling, the best performing G10 currency of the year, gained at $1.32540, with its rally being driven by signs of a steadying UK economy and sticky inflation.

British inflation stood at an annual rate of 2.2% in August, unchanged from July. The Bank of England is expected to leave rates unchanged on Thursday.

“We’ll likely see a bit of a divergence between the central banks, with the Bank of England now less likely to cut interest rates at all and the Fed very likely to cut,” Weller added.