After falling against other major currencies in the Asian session, the U.S. dollar recovered and pared most of its losses as the day progressed on Wednesday.

The dollar’s early weakness was due to improved risk sentiment in the market amid growing hopes the $1.9 trillion coronavirus relief package will be passed sometime soon without Republican support.

After recovering from the session’s lows, the greenback faltered again after data showed U.S. consumer prices rose 0.3% in January on higher gas prices.

Meanwhile, speaking at a virtual Economic Club of New York event, Federal Reserve Chair Jerome Powell said today that maintaining “patiently accommodative monetary policy” will be important to returning to a strong labor market but argued more needs to be done.

Powell cautioned that the U.S. is still “very far” from a strong labor market despite the recovery seen since the early days of the coronavirus pandemic.

The dollar index, which recovered to 90.53 from a low of 90.25 before sliding again, was last seen at 90.44, its previous close.

Against the Euro, the dollar was flat at $1.2120, recovering from $1.2146.

The Pound Sterling was stronger, fetching $1.3832 a unit, up from $1.3818 on Tuesday. However, it was well off the session’s high of $1.3867.

The Yen was weaker, albeit only slightly, at 104.61 a dollar.

Against the Aussie, the dollar was stronger with the Aussie-Dollar pair quoting at 0.7721, against Tuesday’s close of 0.7739.

The Swiss franc was stronger at 0.8903, while the Loonie was slightly weak at 1.2698 a dollar.

The material has been provided by InstaForex Company – www.instaforex.com

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