The U.S. currency slipped lower following a speech by Jerome Powell on Tuesday, in which the Federal Reserve chair left the door open to further rate cuts by saying the U.S. labor market remained in the doldrums.

Markets are currently priced for a quarter-point cut at the October 28-29 Fed gathering and another at the following meeting in December, followed by three more cuts next year, according to LSEG data.

"Risk sentiment improved throughout Tuesday – boosted by strong U.S. bank earnings – before Powell's speech added dovish-sounding headlines: slower payrolls, tolerable inflation, and a possible QT rollback," analysts at ING said, in a note.

"That said, the overall policy stance remains broadly unchanged from September. Fed pricing is steady at 48bp of easing for the rest of the year, and we doubt that will shift much before new inflation and jobs data arrive."

The main economic data release Wednesday will be the Fed's Beige Book, which could play a significant role in informing policy given the lack of other data following the U.S. government shutdown.

Source: Investing.com