U.S. Dollar Falls Despite Strong Inflation Data

The U.S. dollar depreciated against its major counterparts in the European session on Wednesday, despite the release of upbeat U.S. consumer inflation data for September.

Data from the Labor Department showed that the consumer price index climbed 0.4 percent in September after rising by 0.3 percent in August. Economists had been expecting another 0.3 percent increase.

Excluding food and energy prices, core consumer prices edged up by 0.2 percent in September after inching up by 0.1 percent in August. The uptick in core prices matched economist estimates.

The report showed the annual rate of growth in consumer prices accelerated to 5.4 percent in September from 5.3 percent in August, while the annual rate of growth in core prices was unchanged at 4.0 percent.

Traders are awaiting the Fed minutes from the September meeting due at 2:00 pm ET. The minutes could shed more insights about the discussions on the tapering timeline as well as the timing of the rate hike.

Market participants expect the Fed to announce the start of tapering asset purchases at its meeting next month.

The greenback fell against its key counterparts in the Asian session, except the franc.

The greenback pulled back to 113.35 against the yen, after touching 113.80 at 8.30 am ET, a level unseen since December 2018. The pair had closed Tuesday's deals at 113.61. The greenback is likely to challenge support around the 109.00 level.

Data from the Cabinet Office showed that Japan core machine orders fell a seasonally adjusted 2.4 percent on month in August - coming in at 839.3 billion yen.

That missed expectations for an increase of 1.7 percent following the 0.9 percent gain in July.

The greenback dropped to 0.9265 against the franc, from Tuesday's close of 0.9300. If the greenback falls further, it may test support around the 0.90 level.

The greenback touched a 2-day low of 1.1571 against the euro, down from yesterday's close of 1.1530. The greenback may locate support around the 1.17 level.

Data from Eurostat showed that Eurozone industrial output declined for the first time in three months in August.

Industrial output dropped 1.6 percent month-on-month in August, reversing a 1.4 percent rise in July. The pace of decline matched economists' expectations and this was the first fall since June.

The greenback declined to a 2-day low of 1.3647 against the pound, compared to Tuesday's closing value of 1.3584. The greenback is poised to challenge support around the 1.40 mark.

Data from the Office for National Statistics showed that the UK economy recovered in August.

Gross domestic product grew 0.4 percent on month, but slightly slower than the economists' forecast of 0.5 percent.

The greenback eased off to 0.7366 against the aussie and 0.6956 against the kiwi, from a 2-day high of 0.7324 and a 5-day high of 0.6912 ,respectively seen in early trades. The next likely support for the greenback is seen around 0.75 against the aussie and 0.72 against the kiwi.

In contrast, the greenback rebounded to 1.2471 against the loonie, from a low of 1.2435 seen at 4:30 am ET. On the upside, 1.26 is possibly seen as its next resistance level.

The Fed minutes from the September 21-22 meeting are set for release at 2:00 pm ET.