The U.S. dollar held steady below a six-and-a-half-month high against major currencies and bitcoin pulled further away from record highs on Wednesday as markets paused for so-called Trump trades ahead of key U.S. inflation data later in the day.
The dollar is reaping the benefits of Republican Donald Trump's victory in the U.S. presidential election last week, and is not far from Tuesday's high of 106.17, its strongest level since May 1, according to Reuters.
Investors are pricing in tax cuts and trade tariffs under the incoming administration that are seen as inflationary.
Meanwhile, Republicans are close to gaining full control of Congress, which would give the president-elect the power to push his agenda.
Trump's trade also sent U.S. Treasury yields higher as markets bet the Federal Reserve may ease the scope of future interest rate cuts.
Federal Reserve Chairman Jerome Powell is scheduled to speak this week, ahead of US producer price index data on Thursday and retail sales on Friday.
Markets now see a 60% chance of another quarter-point rate cut by the Federal Reserve in December, down from about 84% a month ago.
The US dollar index, which measures the currency against a basket of currencies, rose 0.04% to 106.03.
Bitcoin halted its record-breaking rally, falling about 1% to $87,450 after hitting an all-time high of $89,998 on Tuesday. Trump has vowed to make the United States the cryptocurrency capital of the planet.
The dollar rose 0.12 percent against the yen to 154.80 after touching 154.934, its highest level against the Japanese currency since July 30.
Japan's wholesale inflation accelerated in October at its fastest annual pace in more than a year as a renewed weakening yen pushed up import costs for some goods, complicating the Bank of Japan's decision on when to raise interest rates.
The euro struggled to find support amid political uncertainty as Germany, the bloc's largest economy, prepares to hold elections on Feb. 23, weeks after the collapse of Chancellor Olaf Scholz's ruling coalition.
Meanwhile, markets are considering potential tariffs that Trump may impose on Europe, as well as China.
The euro held steady near a one-year low of $1.0595 hit on Tuesday, and was last down 0.09 percent at $1.0615.
The pound was almost flat at $1.27475, pressured by a broadly stronger US dollar.
The yuan in offshore transactions recorded 7.2354 yuan against the dollar, up about 0.14%.
Elsewhere, the Australian dollar fell 0.05% to $0.6529.
