U.S. Dollar Rebounds On Inflation Worries

The U.S. dollar gained against its major counterparts in the European session on Wednesday, amid a pullback in European shares on growing inflation concerns and a possible policy tightening by the U.S. Federal Reserve.

Investors turn their attention to the minutes of the Federal Reserve's April monetary policy meeting, which could offer policymakers' views on the recovery, inflation and potential timing of any monetary policy adjustments.

The Fed has repeatedly signaled that the recent increase in inflation largely reflected "transitory factors" and it intends to keep policy accommodative for some time to come.

The minutes to be published later in day are expected to confirm that outlook.

U.S. treasury yields rose, with the benchmark yield on 10-year note touching 1.66 percent. Yields move inversely to bond prices.

Federal Reserve Vice Chair Randal Quarles and Federal Reserve Bank of Atlanta President Raphael Bostic are scheduled to speak at separate events today.

The greenback rebounded from its prior lows of 108.83 against the yen and 0.8967 against the franc and rose to 109.25 and 0.9020, respectively. Next likely resistance for the greenback is seen around 112.00 against the yen and 0.92 against the franc.

The greenback edged higher to 1.4152 against the pound and 1.2200 against the euro, following its previous low of 1.4201 and more than a 4-month low of 1.2245, respectively. On the upside, 1.38 and 1.20 are likely seen as its next resistance levels against the pound and the euro, respectively.

The greenback touched 2-day highs of 1.2095 against the loonie, 0.7735 against the aussie and 0.7182 against the kiwi, up from its early lows of 1.2057, 0.7798 and 0.7247, respectively. The currency is likely to find resistance around 1.25 against the loonie, 0.75 against the aussie and 0.70 against the kiwi.

Looking ahead, Canada CPI for April is due out in the New York session.

The Fed minutes from the April 27-28 meeting are set for release at 2:00 pm ET.