U.S. Dollar Weakens Against Majors

The U.S. dollar declined against the other major currencies in European deals on Wednesday, as investors pushed back expectations for the Federal Reserve rate hike to later this year, after recent string of weak data showed a slowdown in the first quarter.

Early this week, New York Fed President William Dudley said that the timing of Fed's normalization was unclear as it continued to be dependent on economic performance. Although the US economy has further to reach the Fed's dual mandate of full employment and 2 percent inflation, the data would 'hopefully' support a rate hike later this year, Dudley told at the Bloomberg Americas Monetary Summit.

The policy makers had already ruled out a rate hike at next week's meeting of the Federal Open Market Committee, April 28-29. Even though a move in June is seen possible, weak reading on March job growth, factory data and retail sales have lead to a shift in rate hike expectations.

The greenback was down in the previous session, after exhibiting mixed performance on Tuesday. The greenback broadly advanced against the pound, yen and the franc but was lower against the euro yesterday.

The greenback declined to a 5-week low of 1.5073 against pound, from a high of 1.4913 hit at 8:30 pm ET. The next possible support for the greenback may be located around the 1.52 zone.

The Bank of England's nine-member rate-setting body in April once again decided unanimously to leave the interest rate and the size of asset purchases unchanged as policymakers took note of a strengthening in the euro area economic activity and the prospect of UK inflation turning negative in coming months.

"All Committee members agreed that it was appropriate to leave the stance of monetary policy unchanged at this meeting, although two members regarded this month's decision as finely balanced," the minutes of the April 8-9 meeting showed.

The greenback fell to 1.0800 against the euro, its weakest since April 20, off early high of 1.0715. The greenback is likely to challenge support around the 1.10 mark.

Reversing from an early high of 0.9560 against the franc, the greenback slipped to a 2-day low of 0.9500. If the greenback extends slide, it is likely to find support around the 0.94 area.

The greenback eased to 119.34 against the yen, after having advanced to 119.77 in Asian deals. On the downside, the greenback may possibly find support around the 118.00 mark.

The greenback also slipped to a 5-day low of 0.7736 against the kiwi, 2-day lows of 1.2210 against the loonie and 0.7806 against the aussie, from its previous highs of 0.7657, 1.2286 and 0.7704, respectively. Further downtrend may lead the greenback to support levels of around 0.80 against the kiwi, 1.20 against the loonie and 0.80 against the aussie.

Looking ahead, U.S. house price index for April, existing home sales for March and Eurozone consumer confidence index for April are slated for release in the New York session.

At 1:00 pm ET, German Bundesbank board member Andreas Dombret is expected to speak on the current situation in the euro area in New York.