US dollar rate index news: The dollar consolidated on Wednesday as investor attention fixed on a key inflation report due out of the US later in the day, while the yen remained pinned a whisker away from what markets believe to be the line in the sand for Japanese authorities to intervene. The main market focus on Wednesday is US consumer price inflation for March, which traders have been eagerly awaiting for hints on the Fed's policy outlook.

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The inflation data follows a strong jobs report last Friday that blew past forecasts, stirring more questions on how soon and how much the central bank will cut rates this year. Futures traders reduced bets to the lowest level since October, around 60 basis points in rate cuts this year, LSEG data showed on Monday, amid evidence of continued strength in the US economy.

Ahead of the data, US interest rate futures set the odds of the first cut occurring in June at about 60 per cent, up from 51 per cent on Monday, according to CME Group's FedWatch tool, although the possibility of a hold has bumped up to 40 per cent.

A solid CPI number will likely have markets pricing out a June cut, which could see the dollar rising sharply, said Carol Kong, a currency strategist at Commonwealth Bank of Australia. "A strong core CPI of 0.3 per cent (month-to-month) or above will likely break the case for a June rate cut because there are two more CPI readings ahead of the meeting which are likely not sufficient to show a pattern of slowing inflation."

On the other hand, even if the data comes in below expectations, June bets will probably remain little changed as hurdles remain, meaning the dollar may only dip modestly, she said. "The US CPI will be a big test for Japanese authorities," Kong added. The US dollar index , which measures the greenback against six rivals, held firm at 104.10.

The yen remained close to its 34-year low versus the dollar ahead of the data, after it received some support as the Bank of Japan Governor Kazuo Ueda on Tuesday signalled the chance of another interest rate hike later this year in line with market bets.

The Japanese currency strengthened 0.06 per cent to 151.70 per dollar as the BOJ chief spoke again in the Asian morning. Elsewhere, the euro was steady at $1.085575, as the European Central Bank meeting on Thursday fast approaches. The ECB is expected to hold rates this week, although traders betting the central bank will start cutting in June will be looking for signals from policymakers.

Sterling was mostly flat at $1.26760. Ahead of the US CPI, the Reserve Bank of New Zealand is expected to leave rates at 5.5 per cent at its monetary policy meeting on Wednesday. Focus will be on the tone of the RBNZ's statement for clues on the outlook.

The kiwi rose 0.07 per cent versus the greenback to $0.60655. The Australian dollar ticked up 0.05 per cent to $0.6630.