The U.S. dollar came under pressure in the European session on Wednesday, as hopes for an immediate Fed tapering announcement lessened after softer-than-expected U.S. inflation data for August.

U.S. consumer prices rose 0.3 percent from July and core inflation edged up just 0.1 percent, reflecting the Fed's view that price pressures could be transitory.

The data pushed back expectations for the Fed's tapering of the asset purchase program in the near term.

The Federal Reserve's two-day monetary policy meeting is due next week. Investors hope that policymakers could delay a decision on tapering in the wake of soft data, Delta worries and slowing global growth.

Today's key economic data include U.S. import and export prices, industrial production and New York Fed's empire manufacturing survey.

The greenback declined to 1.1832 against the euro and 1.3843 against the pound, off its prior 2-day high of 1.1799 and a 6-day high of 1.3793, respectively. The greenback is poised to target support around 1.20 against the euro and 1.40 against the pound.

The greenback retreated from its early highs of 0.9205 against the franc and 109.74 against the yen, weakening to a 5-day low of 0.9164 and a fresh 4-week low of 109.22, respectively. Immediate support is seen near 0.90 against the franc and 108 against the yen.

The greenback eased off to 0.7109 against the kiwi, 0.7337 against the aussie and 1.2666 against the loonie, after rising to near a 2-week high of 0.7073, fresh 2-week high of 0.7301 and a 6-day high of 1.2709, respectively in early trades. The greenback is likely to test support around 0.73 against the kiwi, 0.75 against the aussie and 1.25 against the loonie.

Looking ahead, Canada CPI, U.S. import and export prices and industrial production, all for August, and New York Fed's empire manufacturing survey for September are set for release in the New York session.

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