Dollar Lower After Soft U.S. Consumer Inflation Data

The U.S. dollar was lower against its major counterparts in the European session on Wednesday, as a data showed that nation's consumer prices came in flat for November, reducing market expectations for further hikes next year.

Data from the Labor Department showed that U.S. consumer prices came in flat for November as a sharp pullback in gasoline prices offset increases in other prices.

The consumer price index was unchanged in November after rising by 0.3 percent in October. The unchanged reading matched economist estimates.

Excluding food and energy prices, core consumer prices edged up by 0.2 percent in November, matching the uptick seen in October as well as expectations.

Investors await the Fed decision due next week, when it is widely expected to raise interest rates for the fourth time this year.

The dollar has been falling over the past few weeks, amid rising hopes that the Fed is likely to pause its rate-hike cycle next year as economic growth slows in the U.S.

The currency showed mixed trading against its major counterparts in the Asian session. While it dropped against the euro and the pound, it held steady against the franc. Against the yen, it trended higher.

The greenback dropped to 1.2622 against the pound, after rising to a 1-1/2-year high of 1.2477 at 2:30 am ET. The greenback is seen finding support around the 1.28 level.

Following an 8-day high of 113.52 against the yen seen at 2:15 am ET, the greenback pulled back to 113.30 after the data. If the greenback falls further, 112.00 is possibly seen as its next support level.

Data from the Bank of Japan showed that Japan producer prices fell 0.3 percent on month in November.

That missed expectations for a decline of 0.1 percent following the 0.4 percent increase in October.

The greenback retreated to 0.9937 against the franc, from a 6-day high of 0.9966 set at 7:30 am ET. The greenback is likely to find support around the 0.98 level.

The greenback fell back to 1.1363 against the euro, after having climbed to 1.1315 at 2:30 am ET. The greenback is poised to find support around the 1.15 level.

Figures from Eurostat showed that Eurozone's industrial production grew in October after a slump in the previous month.

Industrial production rose 0.2 percent from September, when it declined 0.6 percent, which was revised from 0.3 percent. The growth was in line with economists' expectations.

The greenback slipped to 1.3341 against the loonie, a 2-day low. This follows a high of 1.3396 seen at 5:30 pm ET. On the downside, 1.32 is possibly seen as the next support level for the greenback.

The greenback eased to 0.7224 against the aussie, heading to pierce a 5-day low of 0.7230 hit at 8:30 pm ET. Next key support for the greenback is seen around the 0.74 region.

On the flip side, the greenback held steady against the kiwi, following a 2-week high of 0.6825 it touched at 8:25 am ET. The next possible resistance for the greenback is seen around the 0.67 level.

The U.S. monthly budget statement for November is scheduled for release at 2:00 pm ET.