On Wednesday, the dollar was unable to hold on to the bullish momentum created by hawkish comments from Federal Reserve Chairman Jerome Powell, and fell against a basket of global currencies.
The dollar's earlier gains came after Jerome Powell said that interest rates are likely to remain high for a long time given the "lack of progress" on the central bank's inflation target.
"Right now, given the strength of the labor market and progress on inflation, it is appropriate to give restrictive policy additional time to work and to be guided by the data and the changing outlook," Powell said at a forum in Washington.
That dashed investor hopes for a significant easing of US monetary policy this year.
The Dollar Index (DXY), which tracks the greenback against a basket of global currencies, fell 0.20 percent to 106.1.
The EUR/USD was up 0.19% at 1.0637. At the same time, the pair's gains are limited amid diverging policies from the Fed and the ECB.
The GBP/USD jumped 0.42% to 1.2471 on news that the UK's annual inflation rate fell to 3.2% in March, beating market expectations of 3.1%.
The NZD/USD is up 0.60% at 0.5914 amid expectations that the Reserve Bank of New Zealand is unlikely to cut its official cash rate (OCR) following the release of the latest inflation data.
Data from Statistics New Zealand showed that consumer prices rose a seasonally adjusted 0.6% in the first quarter of 2024.
"Price increases in the quarter were the lowest since June 2021. However, they remain above the Reserve Bank of New Zealand's target range of 1-3 percent," highlighted Nicola Growden, senior manager, consumer prices at Stats NZ.
AUD/USD rose 0.39 percent to 0.6426 as the ASX 200 Index rebounded from three straight days of declines.
USD/JPY fell 0.15% to 154.49 on risk aversion. A possible escalation of tensions in the Middle East is boosting demand for safe-haven assets such as the JPY.
Meanwhile, Kieran Williams, Head of Asia FX at InTouch Capital Markets, believes that the pair will soon rise above the 155 level as 10-year Treasury yields rose to a five-month high.
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