The U.S. dollar was lower against its major counterparts in the New York session on Wednesday, as consumer inflation moderated in July, reinforcing expectations for a rate cut from the U.S. Federal Reserve in September.

Data from the Labor Department showed that the consumer price index rose by 0.2 percent in July after edging down by 0.1 percent in June. The modest increase by consumer prices matched expectations.

Core consumer prices, which exclude food and energy prices, also crept up by 0.2 percent in July after inching up by 0.1 percent in June. The uptick by core consumer prices was also in line with economist estimates.

Meanwhile, the report said the annual rate of consumer price growth slowed slightly to 2.9 percent in July from 3.0 percent in June. Economists had expected the pace of growth to remain unchanged.

The annual rate of core consumer price growth also slipped to 3.2 percent in July from 3.3 percent in June, in line with expectations.

Expectations for 50 basis point rate cut at the Fed's Sept. 17-18 meeting diminished following the release of CPI report. However, traders increased bets of a 25 basis point rate cut by the Fed in September.

CME Group's FedWatch Tool is currently indicating a 56.5 chance the Fed will lower rates by a quarter point and a 43.5 percent chance of a half point rate cut.

The greenback declined to a 7-1/2-month low of 1.1047 against the euro and near a 4-week low of 1.3689 against the loonie, from yesterday's close of 1.0993 and 1.3705, respectively. The currency may locate support around 1.12 against the euro and 1.33 against the loonie.

The greenback eased against the yen and the franc and was trading at 147.10 and 0.8650, respectively. This may be compared to its early 6-day lows of 146.07 against the yen and 0.8616 against the franc. The currency is poised to challenge support around 142.00 against the yen and 0.85 against the franc.

The greenback retreated to 0.6030 against the kiwi, from an early 2-day high of 0.6002. This may be compared to a previous 4-week low of 0.6084. If the currency falls further, it is likely to test support around the 0.63 region.

The greenback pulled back to 1.2863 against the pound. The currency is seen finding support around the 1.31 level.

Meanwhile, the greenback rose to 0.6601 against the aussie, reversing from an early fresh 3-week low of 0.6642. The currency is likely to locate resistance around the 0.64 level.

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