The dollar weakened on Wednesday, with weak U.S. confidence data and concerns about the impact of broad tariffs on U.S. growth dampening its recent recovery.

The dollar retreated about 0.5 percent against the yen overnight, dropping below 150 yen to 149.95 early in Asia. The euro, which spent the week sliding from a five-month high, was now steady at $1.0789.

The euro and the Russian ruble did not react immediately to the U.S. deal with Russia and Ukraine to halt attacks at sea and on energy targets, although wheat prices fell as the U.S. said it would push for the lifting of sanctions on Russian agriculture.

The focus is on next week, when U.S. President Donald Trump has threatened to impose - or at least provide details of - a complex set of tariffs on cars, chips and pharmaceuticals. The trade-sensitive Australian dollar was above 63 cents ahead of monthly inflation data that is likely to be difficult to predict and reinforces speculation the central bank is in no hurry to cut interest rates. The Aussie reacted little to Tuesday's federal budget, which promised tax cuts and extra borrowing to fund relief measures for voters ahead of a May general election.

"The main driver of AUD/USD over the next few weeks, and perhaps months, will be the new U.S. trade policy and the response from foreign governments," said Commonwealth Bank of Australia strategist Joe Capurso.

"If market participants are surprised by larger-than-expected U.S. tariffs and retaliation by other governments next week, AUD/USD could test $0.60 in the coming weeks."

The New Zealand dollar was steady at $0.5732. Tariffs and the threat of tariffs have prompted counterintuitive moves in currency markets as concerns that they could hurt U.S. growth have disrupted the assumption that the levies are supposed to be inflationary and boosted the dollar.

Overnight data showing U.S. consumer confidence plunged to its lowest level in more than four years in March highlighted how the uncertainty is weighing heavily on households.

For the quarter, the dollar index – which had strengthened sharply between September and January – is headed for a decline of about 4%.

Sterling held steady at $1.2948 ahead of UK inflation data and budget update due later in the day. (Newsmaker23)

Source: Reuters