The dollar dropped Wednesday awaiting the outcome of the Federal Reserve's latest policy meeting and after a shock Democrat poll win in a staunchly Republican senate seat fuelled fears about US President Donald Trump's tax cut plans.

European stock markets were slightly lower after Tokyo closed down, as investors also looked ahead to central bank policy announcements due Thursday from both the European Central Bank and the Bank of England.

Official data Wednesday showed British unemployment remaining at a 42-year low level of 4.3 percent.

In New York on Tuesday, the Dow and S&P 500 indices clocked up fresh record highs, lifted by share price gains for financials ahead of the expected interest rate hike by the Fed on Wednesday.