LONDON (Reuters) – The U.S. dollar edged higher on Wednesday as investors moved to the sidelines ahead of a U.S. Federal Reserve policy statement and a speech by Joe Biden later in the day where the U.S. president is set to announce more stimulus plans.

Though the greenback recovered from a one-month low hit earlier this week, investors expect the U.S. central bank to maintain its policy settings and Fed Chairman Jerome Powell is seen as likely to repeat his dovish message.

The dollar index rose 0.2% at 91.047, bouncing from Monday’s low of 90.679, its weakest level since March 3, though investors were not convinced a recent downtrend had ended.

The greenback’s gains were also bolstered by higher U.S. Treasury yields with benchmark yields on 10-year notes rising above 1.60% after tepid auction results. [US/]

Investors’ inflation expectations, measured by the break-even inflation rate calculated from U.S. inflation-linked bonds, rose above 2.40% on Tuesday, the highest level since 2013.

But analysts expect the Fed will remain unperturbed by the prospects of more stimulus plans and rising inflation expectations, holding the prospect of more losses for the greenback in the coming weeks.

“We still expect Powell to remain ultra-dovish and emphasise the long period ahead in which the Fed plans to maintain loose monetary policy, which will leave open the prospect of further USD weakness,” MUFG strategists said.

The euro slipped 0.2% to $1.2070, off Monday’s two-month high of $1.2117.

The dollar stood at 108.97 yen, having jumped 0.59% overnight and extending its recovery from a seven-week low of 107.48 touched last week, in tandem with rises in U.S. bond yields.

Biden is expected to roll out a plan to raise taxes on the wealthiest Americans, including the largest-ever increase in levies on investment gains, to fund about $1 trillion in childcare and other social spending.

Elsewhere, the Australian dollar dropped 0.3% to $0.77415 after the country’s consumer price index came in weaker than expected.By investing.com