Before Powell's speech, the dollar is expected to experience its worst monthly loss since 2010.

Prior to a speech by Federal Reserve Chair Jerome Powell on Wednesday, the dollar retreated off a one-week high, as anticipation over a potential relaxation of China's COVID restrictions put the greenback on line for its worst monthly loss in more than 20 years.

One of the better performers was the euro, which increased by as much as 0.3% ahead of euro zone inflation data that may have revealed the first slowdown in inflation since June of last year.

In November, harmonised consumer inflation is predicted to have increased by 10.4%, which is less than the 10.6% final estimate for October. Still, it is greater than five times the target rate set by the European Central Bank. However, after nearly two years of inflation accelerating practically nonstop, investors may welcome any indication that the worst is finally behind us.

On Tuesday, European assets rose as a result of a slowdown in inflation in Spain and several important German states.

With the ECB meeting in less than two weeks, "the major attention is expected to be on today's flash CPI from the EU, which might set the stage as to whether we get 50 basis points or 75 bps," said Michael Hewson, chief markets strategist at CMC Markets.