Dollar pressured after rally fizzles

The dollar was under pressure on Wednesday after more weak US data clouded the timeline for an interest rate hike, while the euro got a lift from hopes for a long-awaited Greek bailout deal.

The greenback slipped to 123.90 yen in Tokyo trading from 124.09 yen in US trading, and well off a more than 12-year high above 125 yen earlier Tuesday in Asia.

The euro ticked up to $1.1160 and 138.50 yen, against $1.1152 and 138.39 yen in New York, where the unit jumped on figures that showed rising inflation in the eurozone.

The dollar took a hit from remarks Tuesday by US Fed governor Lael Brainard that a recent run of weak data casts doubt on the strength of the US economy, which clouds expectations for a rate hike later this year.

Fresh data Tuesday showed US factory orders in April fell by a sharper-than-expected 0.4 percent, logging a decline in eight of the last nine months.

The euro benefited from speculation Greece is moving closer to an 11th hour deal with international creditors to avert a default.

"This was a classic squeeze on the US dollar across the board, and really led by euro," said Raiko Shareef, a markets strategist at the Bank of New Zealand.

"There was an almost perfect storm of factors to give the US dollar a bit of a knock back," he said.

Greek Prime Minister Alexis Tsipras will meet European Commission President Jean-Claude Juncker Wednesday for make-or-break bailout talks, with a deadline looming for Athens to make a critical repayment.

Greece has until Friday to pay 300 million euros owed to the International Monetary Fund.

There are fears that Athens does not have the necessary funds and will default, possibly setting off a chain reaction that could end with a messy exit from the eurozone.

"The euro clearly has the ability to lead the dollar higher or lower across the board, and really that vulnerability stems from very different potential outcomes you get from the negotiations between Greece and its creditors," Shareef said.

The European Central Bank will hold a policy meeting later Wednesday.

The dollar mostly weakened against other Asia-Pacific currencies.

It fell to Sg$1.3461 from Sg$1.3552 on Tuesday, to Tw$30.79 from Tw$30.88, to 1,104.80 South Korean won from 1,114.41 won, and to 33.64 Thai baht from 33.78 baht.

The greenback also slipped to 13,204.00 Indonesian rupiah from 13,236.00 rupiah and to 44.63 Philippine pesos from 44.65 pesos, while it edged up to 63.79 Indian rupees from 63.74 rupees.

The Australian dollar rose to 77.97 US cents from 76.32 cents while the Chinese yuan bought 19.96 yen against 20.11 yen.

-- Bloomberg News contributed to this article --