U.S. Dollar Drops As Treasury Yields Retreat; Fed Minutes Due

The U.S. dollar weakened against its major counterparts in the European session on Wednesday, as the continued rise in coronavirus cases in the country lifted the safe-haven treasuries, while investors awaited minutes from the Federal Reserve's latest meeting for more clues about the timing of the first rate hike.

Treasury yields retreated, with the benchmark yield on the 10-year note falling to 1.65 percent. Yields move inversely to bond prices.

The U.S. recorded more than one million new Covid cases on Monday, driven by a surge in the Omicron variant.

Total infections in the country exceeded 55 million and the death toll surpassed 826,000.

The Federal Reserve will publish the minutes from the December meeting later in the day.

Money markets are currently pricing in a high probability of a Fed rate increase in May, followed by two more by the end of the year.

The greenback held steady against its major rivals in the Asian session, except the euro.

The greenback dropped to 2-day lows of 0.7260 against the aussie and 1.1324 against the euro, from Tuesday's closing values of 0.7239 and 1.1287, respectively. The greenback is seen finding support around 0.75 against the aussie and 1.16 against the euro.

The greenback edged down to 1.3555 against the pound and 0.9141 against the franc, compared to yesterday's closing quotes of 1.3526 and 0.9156, respectively. The next likely support for the greenback is seen around 1.37 against the pound and 0.90 against the franc.

The greenback, which ended Tuesday's deals at 0.6806 against the kiwi and 116.13. against the yen, dropped to 0.6822 and 115.62, respectively. The currency may target support around 0.70 against the kiwi and 112.00 against the yen.

The greenback, however, rose against the loonie with the pair worth 1.2732. The greenback was trading at 1.2703 against the loonie at yesterday's close. The greenback is likely to test resistance around the 1.30 level.

Looking ahead, U.S. ADP private payrolls data for December is scheduled for release at 8:15 am ET.

Canada building permits and new housing price index for November will be published in the New York session.

The Fed minutes from the December 14-15 meeting are set for release at 2:00 pm ET.