The dollar fell on Wednesday ahead of a widely forecast rise in US interest rates expected to be announced by the Federal Reserve later in the day.
The US currency was down against most of its rivals – the majors such as the euro and sterling, and emerging market currencies.
A country's currency is usually supported when its central bank is engaged in a series of interest rate increases: higher rates foster better returns for international investors and encourage greater investment flows.
The Fed, however, has been extremely diligent during the current cycle of rate hikes in communicating its intentions to the markets to ensure they are not surprised.
Meanwhile, a soft spot in US inflation has clouded the future path for US rates. A further rate rise in September had previously been expected, but markets have begun to doubt this.
"It should be kept in mind that the recent weakness in US inflation has not only sparked concerns for the health of the US economy but also created uncertainty around the Federal Reserve’s policy plan for 2017," said Lukman Otunuga, analyst at FXTM.
Much will be learned from the Fed's subsequent press conference, and any dovish tone taken by Janet Yellen, chair, is likely further undermine the dollar bulls.
Otunuga continued: "The outlook remains tilted to the downside as political uncertainty in Washington and soft economic data weighs heavily on the currency.