Investing.com - The U.S. dollar turned higher against other major currencies on Wednesday, recovering from earlier losses but gains were expected to remain limited as investors were still cautious following the recent rout in global equities.
Sentiment waned after global equity markets began to plunge on Friday following the release of strong U.S. employment data, which sparked concerns over rising inflation, sending bond yields sharply higher.
The Dow Jones Industrials index was particularly hit on Monday, when it recorded its worst daily point drop in history.
However, U.S. equities rebounded on Tuesday, leading to a downward turn in the greenback, which had benefited from Wall Street's sharp decline.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.16% at 89.65 by 05:15 a.m. ET (09:15 GMT), off the nearly two-week peak of 89.58 reached overnight.
The euro and the pound were lower, with EUR/USD down 0.20% at 1.2351 and with GBP/USD shedding 0.29% to 1.3910.
In the euro zone, German political leaders were said to have reached a breakthrough in coalition talks Wednesday morning.
The yen was stronger, with USD/JPY down 0.42% at 109.09, while USD/CHF rose 0.27% to 0.9385.
Elsewhere, the Australian and New Zealand dollars were lower, with AUD/USD declining 0.47% to 0.7869 and with NZD/USD sliding 0.35% to 0.7314.
Market participants were looking ahead to the RBNZ's monthly policy decision, due early Thursday. The central bank was expected to leave interest rates on hold at 1.75%.
Investors will especially be focusing on the RBNZ's policy statement for potential indications on the central bank's future policy moves.
Meanwhile, USD/CAD added 0.18% to trade at 1.2515.