The U.S. dollar retreated against its major counterparts in the European session on Wednesday, as the nation's consumer inflation came in line with expectations in August.

Data from the Labor Department showed that the consumer price index climbed by 0.6 percent in August after inching up by 0.2 percent in July. The price growth matched expectations.

Excluding food and energy prices, core consumer prices rose by 0.3 percent in August after edging up by 0.2 percent in July. Economists had expected another 0.2 percent uptick.

The Labor Department also said the annual rate of consumer price growth accelerated to 3.7 percent in August from 3.2 percent in July. The annual rate of growth was expected to accelerate to 3.6 percent.

Meanwhile, the report said the annual rate of growth by core consumer prices slowed to 4.3 percent in August from 4.7 percent in July, in line with economist estimates.

Economists widely expect the Federal Reserve to hold interest rates steady at its monetary policy meeting next week.

The greenback eased to 147.24 against the yen and 1.2504 against the pound, off an early 5-day high of 147.74 and a multi-month high of 1.2433, respectively. The greenback is seen finding support around 145.00 against the yen and 1.28 against the pound.

The greenback retreated to 1.0761 against the euro and 0.6429 against the aussie, from an early high of 1.0710 and a 2-day high of 0.6380, respectively. The greenback may face support around 1.09 against the euro and 0.66 against the aussie.

The greenback fell to near a 2-week low of 1.3535 against the loonie and a 2-day low of 0.5926 against the kiwi, reversing from an early high of 1.3586 and a 5-day high of 0.5879, respectively. The next possible support for the currency is seen around 1.33 against the loonie and 0.62 against the kiwi.

The greenback pulled back to 0.8911 against the franc, down from a previous multi-month high of 0.8953. This may be compared to its previous 2-day low of 0.8897. The currency is likely to face support around the 0.88 level.

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