European session markets saw the US dollar trade slightly lower, while the pound gained on the back of higher wage growth in the UK.
A sharp rise in average UK incomes in the second quarter of June saw fears of inflation rise again, pushing the pound to trade higher around 1.2700 against the USD.
Meanwhile, the yuan weakened to a 9-month low after China's central bank cut interest rates to support a recovery following a series of gloomy economic data.
To curb the fall of the yuan, major state-owned banks reportedly sold US dollars in the Asian session.
The dollar index, which measures the greenback's performance against six major currencies, declined slightly with prices hovering around 103.07 in the European session.
Investors are now focusing on the release of US retail sales data in the New York session to determine the future direction of the giant currency.
Risk-sensitive currencies, the Aussie and New Zealand dollars continued to trade bleakly at 9-month lows against the US dollar following gloomy data from Australia and China.
In addition, the yen remains stuck at its weakest level since November last year despite the latest data showing Japan's economy growing at a solid 6% in the second quarter of 2023.
The euro currency, on the other hand, struggled to register an increase by trading stable at around the price of 1.0925 against the US dollar.
Elsewhere, the Canadian dollar slipped to a two-month low against the greenback ahead of the release of Canadian inflation data tonight.
Separately, the Russian ruble rallied again after Russia's central bank raised its key interest rate by 350 basis points to 12% from 8.5%.
The emergency move was made at a surprise meeting on Tuesday evening after the ruble plunged past 100 against the dollar.
