The dollar remained on the back foot on Wednesday after tumbling versus major peers overnight as a benign reading for U.S. producer prices reinforced bets on Federal Reserve interest rate cuts this year.

The dollar remained on the back foot on Wednesday after tumbling versus major peers overnight as a benign reading for U.S. producer prices reinforced bets on Federal Reserve interest rate cuts this year.

Risk-sensitive currencies stayed strong after the unexpected softening in inflation buoyed equities, even with crucial U.S. consumer price index figures still looming later on Wednesday.

The Australian dollar reached a more than three-week peak, while sterling traded near a more than two-week high following its best one-day performance against the dollar since late April.

New Zealand's dollar hovered near a four-week high ahead of a Reserve Bank of New Zealand policy decision, with markets split over the potential for a rate cut.

The dollar index — which measures the currency against six major rivals, including sterling, the euro and the yen — was steady at 102.63 after slumping 0.49% overnight.

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