On Wednesday, the U.S. dollar moved sideways, offering some respite to the yen and other major currencies following last week's sharp rally to a seven-week high, as investors paused to evaluate the outlook for U.S. interest rates.

The New Zealand dollar fell to its lowest level since August 19, reaching $0.6096, after the Reserve Bank of New Zealand (RBNZ) lowered interest rates by 50 basis points. The kiwi was last down 0.55%, trading at $0.61035.

A Reuters poll last week had shown that most economists anticipated a significant half-percentage-point cut. The central bank initiated an easing cycle in August, aiming to reduce rates from 15-year highs.

This week's U.S. economic data is relatively sparse, providing a reprieve after a strong jobs report on Friday pushed the dollar higher and led markets to revise expectations for future interest rate cuts.

Later on Wednesday, the minutes from the Federal Reserve's September meeting will be released, shedding light on discussions surrounding what was then perceived as a weakening labor market. That meeting concluded with all but one policymaker supporting a 50-basis-point rate cut.

However, the chances of another large cut in November have diminished after recent nonfarm payroll data painted a more resilient picture. According to the CME FedWatch tool, markets now price in about an 85% chance of a quarter-point rate reduction, with a slim possibility that the Federal Reserve may leave rates unchanged.

The key data this week will be the September Consumer Price Index (CPI) report, set for release on Thursday.

"U.S. inflation data and upcoming corporate earnings reports will be crucial in maintaining the dollar's upward momentum, especially if they bolster the narrative of U.S. economic strength," analysts from Westpac IQ noted in a briefing.

The dollar index, which tracks the greenback against a basket of major currencies, remained flat at 102.490, just below Friday's seven-week high of 102.69.

With the dollar stabilizing, the euro hovered around $1.0977, while the British pound steadied at $1.3101, close to Monday's more-than-three-week low of $1.30595.

The dollar/yen pair traded within a tight range, last seen around 148.28 yen, after touching a seven-week high of 149.10 on Monday.

Meanwhile, the Australian dollar remained under pressure, having dropped to $0.6715 on Tuesday—its lowest level since September 16—following dovish signals from the minutes of the nation's central bank's recent meeting. It was last down 0.08%, trading at $0.67415.

Investors continue to keep a close eye on China following a volatile session in Chinese and Hong Kong markets the previous day.

On Tuesday, Beijing expressed confidence in meeting its full-year growth target but stopped short of introducing stronger fiscal measures, leaving investors disappointed as they had expected more robust support to boost the economy.

The offshore yuan stabilized around 7.0695 per U.S. dollar.

Paraphrasing text from "Reuters" all rights reserved by the original author.