The US dollar remains under pressure while most other major currencies are strengthening as economic data points to more interest rate hikes.
Looking at data released on Tuesday, Japan's core inflation jumped to the highest level in more than 30 years to 3.1% in December compared to remaining at 2.9% expected.
This helped the yen trade to remain stable at around 130.00 against the US dollar after falling last week due to the Bank of Japan's (BOJ) decision which defied market expectations.
Meanwhile, the euro hit a 9-month high on Monday following hawkish statements from European Central Bank (ECB) governing council members Klaas Knot and Peter Kazimir who backed two more 50 basis point hikes at the February and March policy meetings.
The strengthening of the euro then continued in the Asian session today, after data on Tuesday showed services activity in the European Zone posted surprise growth in January, with the decline in manufacturing beginning to ease.
In contrast, in the United States, services and manufacturing activity remained under contraction in January even as the decline recorded began to moderate for the first time since September.
As a result, the greenback continues to be under pressure ahead of the release of US preliminary estimates of gross domestic product (GDP) for the fourth quarter on Thursday.
Additionally, the pound steadied after falling on weakness shown in UK manufacturing and services data this month, which signaled the risk of a continued recession in the country.
On the other hand, the Aussie dollar strengthened in the Asian session (Wednesday) as Australian inflation continued to rise in the fourth quarter, in contrast to the kiwi dollar which weakened as inflation eased in the final quarter of 2022.
