Cryptocurrency bitcoin took the early Asia spotlight, dropping over 6% after breaking below support around $60,000. 

Meanwhile, the Aussie popped up to a multi-month high after the latest domestic consumer price data came in a tick above consensus, accelerating 3.5% year-over-year.

But overall moves in the foreign exchange market were muted as traders awaited fresh hints on the state of the world's largest economy.

Investors are unanimous in bets that the Federal Reserve will begin cutting interest rates next month following Chair Jerome Powell's dovish tilt last week, with the debate now centred on whether or not it will be a super-sized 50-basis point cut. 

The current pricing sits at a 36% chance for the larger cut, up from 29% a week ago, according to the CME Group's (NASDAQ:CME) FedWatch Tool.

Markets, which are fully priced for a 25-basis point cut next month, see just over 100 basis points worth of easing by the end of the year.

A preliminary estimate for U.S. gross domestic product in the second quarter is due later this week, along with the Fed's preferred inflation measure, the personal consumption expenditures (PCE) index.

But with attention shifting from inflation to the strength of the economy, the importance of this week's PCE data is debatable, said Matt Simpson, senior market analyst at City Index.

"It will require a strong upside surprise to dispel expectations of multiple Fed cuts," he added.

The dollar index, which measures the greenback against a basket of currencies, was last 0.07% higher at 100.67, hovering above a 13-month low of 100.51 hit in the previous session. 

For the month, the dollar has fallen over 3%, putting it on track for its biggest monthly decline since November 2022.

But given that markets have been pricing in easing from September for weeks now, downside momentum on the dollar appears to be waning, with support built up around 100.18/30, Simpson said.

Sterling ticked down slightly to $1.3250 after hitting its highest since March 2022 against the greenback at $1.3269 on Tuesday.

The euro slid 0.09% to $1.117375 and was sitting not far from a 13-month peak touched at the top of the week.

Bank of Japan Deputy Governor Ryozo Himino on Wednesday reiterated the central bank's stance that it would adjust the degree of monetary easing if it becomes confident that its economic outlook and price targets will be realised.

However, he stressed that the central bank would remain vigilant to developments in financial markets.

The yen seemed to largely brush aside the remarks as it edged 0.26% lower to 144.33 per dollar, off Monday's three-week high of 143.45 against the greenback.

Elsewhere, the Australian dollar hit a seven-month high of $0.6813 after July consumer price data showed a 3.5% rise in prices year-over-year, just above forecasts for a 3.4% rise. It was last up 0.1% at $0.67995.