The greenback weakened to a three-week low following data showing US inflation fell sharply in May.
The consumer price index (CPI) unexpectedly rose 4.0% year-on-year last month, slightly missing expectations for a 4.1% increase and down from 4.9% in April.
It was the lowest figure since March 2021, indicating that high interest rates continue to impact downward pressure on prices.
However, core inflation (excluding food and energy prices), remained high at 5.3% year-on-year.
Following the latest reading as well, investors once again strengthened the confidence that the Federal Reserve (Fed) will keep its interest rate unchanged at the early Thursday morning policy meeting (2.00am Malaysia time).
However, the market will first focus on the release of producer inflation data (PPI) in the upcoming New York session.
However, the impact of the CPI data on the currency is not significant, as investors now shift their focus to the results of the FOMC meeting and the Fed's follow-up statement.
The Asian session saw the Aussie dollar remain strong at a five-week high, while the New Zealand dollar was the strongest in three weeks against the greenback.
Meanwhile, the euro currency strengthened at the highest level in three weeks after successfully reaching the price level of 1.0800 against the US dollar.
The pound traded firmly above the 1.2600 price level with the market focusing on the release of UK gross domestic product (GDP) data for April.
UK employment data published on Tuesday showed encouraging figures in the three months to April had supported the pound.
Additionally, the Canadian dollar surged to its strongest level in four months following a weak US dollar.
In contrast to other major currencies, the yen edged lower against the greenback, pressured by higher 10-year US bond yields at 3.80%.
