The U.S. dollar fell against its major counterparts in the Asian session on Wednesday, as investors focus on U.S. inflation data for clues about the tapering of the asset purchase program by the Federal Reserve.

The U.S. CPI is forecast to rise 0.4 percent on month in May, taking annual rate to 4.7 percent.

Core CPI is seen at 0.4 percent on a monthly basis and 3.4 percent year-on-year.

The data will help gauge the timing of Fed tapering and the prospect of interest rate hikes.

U.S. bond yields fell, with the benchmark 10-year treasury yield falling to 1.52 percent.

Investors shrugged off data showing a surge in China factory prices in May.

The European Central Bank's monetary policy decision is due on Thursday, with investors expecting it to keep key rates and stimulus measures unchanged.

The ECB is likely to avoid any mention of tapering its purchases under PEPP as policy makers want to see a sustained recovery from the pandemic.

The greenback pulled back from its early highs of 1.2171 against the euro and 109.51 against the yen, falling to 1.2187 and 109.33, respectively. The greenback is seen locating support around 1.24 against the euro and 106.00 against the yen.

After rising to 1.4142 against the pound and 0.8970 against the franc earlier in the session, the greenback edged down to 1.4183 and 0.8958, respectively. If the greenback slides further, 1.45 and 0.88 are likely seen as its next support levels against the pound and the franc, respectively.

The greenback weakened to 1.2095 against the loonie, 0.7209 against the kiwi and 0.7753 against the aussie, down from its prior highs of 1.2117, 0.7189 and 0.7733, respectively. The next possible support for the greenback is seen around 1.18 against the loonie, 0.74 against the kiwi and 0.80 against the aussie.

Looking ahead, at 10:00 am ET, the Bank of Canada announces decision on interest rates. Economists forecast the benchmark rate to hold at 0.25 percent.

U.S. wholesale inventories for April are due in the New York session.

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