The U.S. dollar hovered close to multi-month lows against major peers on Wednesday as Treasury yields receded from recent highs, with investors anticipating the minutes of the Federal Reserve’s latest policy meeting for insights into the trajectory of interest rates. The euro inched higher to $1.1577, remaining close to the two-month high reached earlier this week. Sterling was little changed at $1.3533, maintaining its position near a three-month high in anticipation of British inflation data set to be released later on Wednesday, which is broadly expected to indicate ongoing price pressure. The Japanese yen remained relatively stable at 159.56 per dollar, having relinquished a significant portion of its intervention-related gains; however, it continues to trade well above a multi-decade low of approximately 164.

The dollar index, which measures the U.S. currency against six major peers, was down marginally at 99.65. A selloff in U.S. Treasuries seemed to have paused during a week characterised by a scarcity of economic data or other clear catalysts. The yield on the benchmark U.S. 10-year Treasury note extended declines and was last at 4.702%, while that on the 30-year bond fell to 5.282%. Market participants now focus on the Federal Reserve’s release of minutes from the latest meeting of its monetary policy-setting Federal Open Market Committee later in the day, seeking insights into policymakers’ perspectives on interest rates.

Data released in recent weeks indicate a weakening U.S. economy, highlighted by unanticipated job losses in July and subdued inflation figures, prompting investors to reduce their expectations for rate hikes. “If the Fed does not follow through with the rate hikes that ​are being discounted, the ​upside for bond yields ⁠should be very limited here,” Harvinder Kalirai said in a client webcast. “The labour market and ​inflation surprise are rolling over and usually that coincides with a narrowing ​in the ⁠dollar’s yield advantage, and that feeds through into a softer dollar.”

Meanwhile, a stalemate in the Middle East has propelled oil prices to approach three-week highs, sustaining the risk of inflation. U.S. President Donald Trump stated on Tuesday that there were no discussions with Iran and emphasised that the Strait of Hormuz was open, directly opposing Iran’s claim that the waterway was closed to shipping. Elsewhere, the New Zealand dollar and the Australian dollar exhibited minimal fluctuations, last recorded at $0.5874 and $0.7083, respectively.