Dollar hovers near year-low levels as traders eye inflation

The dollar lingered near its weakest levels of the year on Wednesday as investors clung onto bets that the U.S. Federal Reserve would maintain dovish policy settings ahead of inflation data.

The dollar hit its lowest against the euro in two months, following an upbeat European growth survey. It stood just above the $1.2140-level in Asia. 

The Japanese yen slightly fell to 108.79 against the dollar. Sentiment supported the dollar index to rise to 90.278. 

The Aussie and the kiwi slid nearly 0.2% in early trade to sit below recent ten-week highs. The loonie firmed just below a nearly four-year high.

The pound held onto recent gains to stand at $1.4118. Nominal U.S. yields rose with the focus on inflation, but real yields stayed negative and under pressure.