Investing.com - The dollar came under renewed selling pressure on Wednesday, sliding lower against a basket of the other major currencies ahead of the Federal Reserve’s policy decision.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.24% to 88.81 by 03:05 AM ET (08:05 GMT), falling back towards last week’s low of 88.25, its weakest level since December 2014.

The dollar was on track for a steep monthly loss against its peers, with the index down around 3.0% on the month at time of writing.

The dollar has come under pressure as it has lost its relative yield attraction for investors. A faster rate of monetary tightening outside the U.S. would lessen the divergence between the Federal Reserve and other central banks.

The dollar showed limited reaction to U.S. President Donald Trump's State of the Union speech, in which he urged Congress to pass legislation to stimulate at least $1.5 trillion in new infrastructure spending.

Investors remained cautious ahead of a slate of events this week, including the Fed’s two-day policy meeting that ends later on Wednesday and Friday’s U.S. employment report for January.

While the Fed was not expected to make any changes to monetary policy, the meeting was the last time Janet Yellen would serve as Fed chair before the role is taken over by Jerome Powell.

The euro gained ground, with EUR/USD rising 0.34% to 1.2444, moving back in the direction of the more than three year peaks of 1.2537 reached last week.

The single currency has risen around 3.5% against the dollar so far in January.

The dollar was a touch lower against the yen, with USD/JPY dipping to 108.71, not far from last Friday’s four-and-a-half month low of 108.27.

Sterling pushed higher, with GBP/USD rising 0.18% to 1.4170.