The U.S. dollar dropped against its major counterparts in the European session on Wednesday, amid falling treasury yields and expectations for a slower pace of rate hikes by the Federal Reserve.

Investors focus on U.S. PPI and retail sales data due out at 8:30 am ET. Producer inflation is expected to fall 0.1 percent month-on-month in December, after rising by 0.3 percent in November.

Economists expect retail sales to drop 0.8 percent in December from 0.6 percent in November.

U.S. treasury yields dropped, with the benchmark yield on the 10-year note touching 3.481 percent. Yields move inversely to bond prices.

The dollar index that tracks the greenback against a basket of other currencies touched 101.89.

The greenback fell to near a 1-year low of 0.9124 against the franc and near a 5-week low of 1.2388 against the pound, off its early highs of 0.9246 and 1.2254, respectively. The greenback is poised to find support around 0.90 against the franc and 1.27 against the pound.

The greenback eased to 128.88 against the yen, from a 6-day high of 131.57 seen in the previous session. On the downside, 113.00 is possibly seen as the next support level.

The greenback weakened to a 5-day low of 1.3351 against the loonie and a 2-day low of 1.0872 against the euro, from its prior high of 1.3409 and a 2-day high of 1.0766, respectively. Next key support for the greenback is likely seen around 1.30 against the loonie and 1.11 against the euro.

The greenback depreciated to a 5-month low of 0.7036 against the aussie and a fresh 5-week low of 0.6491 against the kiwi, after rising to 0.6973 and 0.6419, respectively in early deals. The greenback is seen finding support around 0.72 against the aussie and 0.66 against the kiwi.

Looking ahead, Canada industrial product and raw materials price indexes for December and U.S. PPI, retail sales and industrial production, all for the same month, as well as business inventories for November and NAHB housing market index for January will be released in the New York session.

The Fed Beige book report will be released at 2 pm ET.

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