U.S. Dollar Extends Slide To 2-week Low Vs Euro After U.S. CPI; Fed Minutes Due

The U.S. dollar extended decline to a multi-week low against the euro in the European session on Wednesday, after a data showed that U.S. consumer prices dropped unexpectedly in March, supporting hopes for two additional rate hikes this year.

Data from the Labor Department showed that U.S. consumer prices edged lower in the month of March.

The Labor Department said the consumer price index dipped by 0.1 percent in March after rising by 0.2 percent in February. Economists had expected consumer prices to come in unchanged.

Excluding food and energy prices, core consumer price index rose by 0.2 percent March, matching the increase seen in the previous month. The uptick in core prices matched economist estimates.

Traders look ahead to the release of the minutes from the most recent meeting of the Federal Reserve, due at 2:00 pm ET.

At the March 20-21 meeting, the policy makers raised interest rates by 25 basis points and signalled two more rate hikes for this year, dampening hopes for agressive rate hike path.

Geopolitical concerns also weighed, as U.S. President Donald Trump suggested that he was considering more aggressive strike in Syria within the next 48 hours.

Russia has threatened to shoot down any U.S. missiles fired at neighboring Syria if the U.S. decides to strike Syrian bases in response to a chemical attack.

The currency has been trading in a negative territory against its major rivals in the Asian session, with the exception of the franc.

The greenback dropped to 106.68 against the yen, from a high of 107.25 hit at 5:30 pm ET. The next possible support for the greenback is seen around the 104.00 level.

Data from the Bank of Japan showed that Japan's producer prices fell 0.1 percent on month in March.

That was in line with expectations following the upwardly revised 0.1 percent increase in February.

The greenback fell to 1.2396 against the euro, its lowest since March 28. The greenback is seen finding support around the 1.25 area.

The greenback reversed from an early 2-day high of 0.9596 against the Swiss franc and held steady therafter. The pair ended Tuesday's trading at 0.9568.

The greenback pared gains to 0.7370 against the kiwi, from a high of 0.7346 hit at 1:00 am ET. The greenback is seen finding support around the 0.75 region.

On the flip side, the greenback climbed to 1.4161 against the pound, after having fallen to a new 2-week low of 1.4223 at 3:30 am ET. On the upside, 1.40 is likely seen as the next resistance for the greenback.

Data from the Office for National Statistics showed that U.K. industrial production grew at a slower pace on weak mining and manufacturing output in February.

Industrial output edged up 0.1 percent month-on-month in February, compared to January's 1.3 percent increase. Production was expected to climb 0.4 percent.

Besides FOMC minutes, U.S. monthly budget statement are scheduled for release in the New York session.