The dollar shed some of its overnight gains against the yen on Wednesday, as investors made last-minute tweaks to positions ahead of a policy meeting expected to initiate a U.S. easing cycle. The Federal Reserve is expected to make its first interest rate cut in more than four years at 1800 GMT,

The yen surged to its highest level in a year, pushing the dollar into a corner as the market braces for a potential bombshell from the Federal Reserve

"While more substantial cuts through year-end are possible should data deteriorate, our baseline remains for a 25 bps rate cut in September, with easing at this pace also likely to occur in November and December," said David Doyle, head of economics at Macquarie.