The U.S. dollar traded largely flat Tuesday, with traders wary ahead of the start of the latest Federal Reserve rate-setting meeting.  

At 05:10 ET (09:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded just higher at 104.342, moving within a tight range.

Dollar calm ahead of Fed meeting

The Fed starts its two-day policy-setting meeting later Tuesday, and is expected to keep rates unchanged when it concludes the following day.

The U.S. central bank is widely expected to leave rates unchanged this week, but traders will be looking for any hints from Fed Chair Jerome Powell on how soon policymakers are prepared to cut rates at his press conference.

Soft inflation readings and dovish-leaning comments from Fed officials have seen markets ramp up bets that September will be that starting point, with a 25 basis points cut.

Powell also has the Jackson Hole gathering of central bankers in August, in the absence of a Fed meeting that month, to further guide the market, but failing to give a clear signal of a September cut this week would likely lead to a strengthening of U.S. Treasury yields and the dollar.

Sterling slips on BOE uncertainty

In Europe, GBP/USD traded marginally lower at 1.2857, ahead of Thursday’s Bank of England meeting.

There is a great deal of uncertainty surrounding this get together, as key policymakers have not spoken publicly for more than two months due to rules in the run-up to the general election at the start of this month.

Policymakers have to judge between higher-than-expected service price inflation and weak growth, with an unchanged verdict the marginal favorite as it stands.

EUR/USD rose 0.1% to 1.0829, after the release of some mixed growth data for the eurozone.

The French economy grew marginally faster than expected in the second quarter, climbing 0.3% from the three months to the end of June. 

However, this relatively good news has been overshadowed by the German economy unexpectedly shrinking in the second quarter, contracting by 0.1% in the second quarter compared with the previous three-month period.