The dollar strengthened against a range of currencies but slipped against the yen on Wednesday, as traders focused on talks over a Ukraine ceasefire and digested the latest round of tariff threats from US President Donald Trump.
The pound, meanwhile, got a short-lived boost from a stronger-than-expected UK inflation print.
The dollar index last stood at 107.2, up 0.19% after dropping 1.2% last week. The yen was stronger against the dollar , up 0.1% at 151.855.
Trump's administration said on Tuesday it had agreed to hold more talks with Russia on ending the war in Ukraine after an initial meeting that excluded Kyiv, a departure from Washington's previous approach that rallied US allies to isolate Russian President Vladimir Putin.
Francesco Pesole, foreign exchange strategist at ING, pointed to the market's base case that a peace deal in Ukraine might be reached at some point. Meanwhile, the European Union's exclusion from the table at peace talks is seen as spurring safe-haven demand into the yen and out of the euro, he said.
The euro was down 0.4% against the yen at 158.25, and down 0.2% against the dollar at $1.0426, Reuters reported.
Pesole highlighted the latest raft of tariff threats from Trump, but said the market was more focused on news around a potential Ukraine peace deal in the short-term.
"There is a residual sort of reluctance in markets to see whether Trump will indeed go ahead with tariffs on trade partners," he said.
Trump said on Tuesday he intends to impose auto tariffs "in the neighborhood of 25%" and similar duties on semiconductors and pharmaceutical imports, the latest in a series of measures threatening to upend international trade.
"Amid all this chaotic, childish back and forth of the presidential tariff announcements, let's not lose sight of what will ultimately come out of it: probably fewer tariffs than expected when he took office, but still substantial ones," Commerzbank forex analysts and strategists said in a note.
The euro was little moved by remarks from European Central Bank board member Isabel Schnabel, who on Wednesday told the Financial Times the central bank was edging closer to pausing rate cuts.
In the UK, official data showed inflation speeding up by more than expected to hit a 10-month high of 3.0% in January and is likely to rise further soon, testing the Bank of England's confidence that price pressures will ease over the longer term.
Sterling was down 0.27% at $1.25790, coming off a two-month high hit immediately after the data.
Against the euro, the pound was virtually unchanged at 82.86 pence. Pesole said the relatively safe position of the UK on trade and the latest inflation figures made the pound more attractive than the euro.
Elsewhere, the Reserve Bank of New Zealand reduced its benchmark rate by 50 basis points to 3.75% on Wednesday as widely expected and signalled future moves would likely be smaller, leaving the currency up 0.2% on the day at $0.5714 .
