Stocks rose on Tuesday after a report said the U.S. and China are seeking talks to defuse an escalating trade conflict between the two countries. Equities also posted their biggest monthly gains since the start of the year.

The Chinese yuan dropped in offshore trade and the Australian dollar slipped on Wednesday on a report the U.S. administration will propose raising its planned tariffs on $200 billion Chinese imports to 25 percent.

The yen gained slightly on the news although the Japanese currency stayed on the defensive after the central bank pledged to keep rates low for an extended period of time while deciding to be more flexible in its yield curve control.

AUD/USD fell 0.15 percent in sympathy to 0.7417.

USD/JPY slipped to 111.74 but it still maintained a large part of its 0.73 percent gains made on Tuesday following the BOJ's forward guidance on rates.

Cable traded at 1.3115 ahead of a Bank of England policy meeting this week on Thursday, at which markets are now pricing in a near-90 percent chance of a 25 basis points rate rise.

On the other hand, solid U.S. economic growth is likely to keep the U.S. Federal Reserve on track for another two hikes this year as it concludes its policy meeting on Wednesday. EUR/USD trades just below 1.1700, at 1.1680 ahead of the FOMC announcement today.