"There is persistence and resilience in inflation in the U.S., but also in much of the G10, as well, meaning that central banks are likely to be cautious," Foley added.

The dollar index has gained almost 3% in the last month, partly thanks to the expectation that the Fed, which meets next week, will leave rates higher for longer.

Nonetheless, traders were attaching a higher chance that the BoC would raise Canadian interest rates again later on Wednesday. The U.S. dollar was trading around one-month lows against its Canadian counterpart at about C$1.3409.

The BoC was the first major global central bank to pause its rate-hike campaign in January.

"There's a bit of a mixed picture right now and some of the central banks that have earlier gone into a pause - looks like it's not really a pause, but more of a skip, and this may be what we're getting with the Fed as well," said Moh Siong Sim, a currency strategist at Bank of Singapore.

 

"There is the idea that perhaps the developed markets' central banks may have to do a bit more (in raising rates)."

Against the dollar, sterling was flat at $1.242, while the Japanese yen rose 0.1% to 139.47.

The euro held steady at $1.0688 after a survey from the European Central Bank showed consumers in the euro zone lowered inflation expectations.

CHINA DATA DISAPPOINTS

 

The yuan showed little reaction to data indicating that Chinese exports shrank much faster than expected in May and imports fell, albeit at a slower pace, as manufacturers struggled to find demand abroad and domestic consumption stayed sluggish.

The offshore yuan was last flat on the day against the dollar at 7.1341. The currency staged a rally late last year after the government dismantled its strict COVID-19 policy that had suppressed normal economic activity.

But the anticipated post-pandemic bounce-back has rapidly run out of steam in China, raising concern about the risks for the global economy when one of its key engines shows signs of faltering. The yuan is now at six-month lows.

Elsewhere, the Turkish lira slid as much as 7.6% to a record low of 23.16 per U.S. dollar.

In cryptocurrencies, bitcoin fell 1.5% to $26,815 after jumping nearly 6% on Tuesday.

The U.S. Securities and Exchange Commission (SEC) sued Coinbase (COIN.O) on Tuesday, accusing the largest U.S. cryptocurrency platform of operating illegally because it failed to register as an exchange, a day after having sued Binance, the world's largest cryptocurrency exchange, and Changpeng Zhao, its chief executive.

Binance's BNB token headed for a week-on-week drop of 9%, down 0.7% on the day.