After slipping lower following slower US inflation data, the US dollar rebounded against the euro and other major currencies in the European session.
Against a basket of major currencies, the dollar index, which measures the greenback's strength, was trading firmer at 101.87 at the time of writing.
Earlier, newly published data showed US inflation rose to 4.9% year-on-year in April, supporting expectations for the Federal Reserve (Fed) to temporarily halt its interest rate hikes.
As a result, the US dollar plunged lower but rebounded as other major currencies declined following dismal Chinese inflation data.
In contrast to the US, China's inflation rose just 0.1% year-on-year last month, adding further evidence of weakness in the economic recovery after Covid restrictions were lifted.
As a result, the yuan plunged to a 2-month low and also dragged the Aussie and New Zealand dollars back from their highest levels since February reached on Wednesday.
Also affected by the rise of the USD, the pound recorded a decline from its strongest level in a year ahead of the decision of the Bank of England (BOE) policy meeting tonight.
Meanwhile, the euro also slipped further to 3-week lows against the strong US dollar.
In addition to the BOE meeting, investors will also focus on the release of jobless claims data and the US producer price index (PPI) in the New York session.
