The dollar pared some losses against major peers on Wednesday but stayed weaker as cooler-than-expected data eased fears that inflation was accelerating and increased the chances the Federal Reserve could cut interest rates twice this year.

Japan’s yen strengthened on Wednesday (Jan 15) on growing bets on a rate hike at the Bank of Japan’s next meeting, while cooling British inflation offered relief to the pound, but traders were reluctant to buy too much into either ahead of US price data.

On Wednesday, a strong dollar rally slowed down as traders were a little more cautious. They awaited a crucial U.S. consumer inflation report that was expected later in the day, keeping investors from making their big moves.

The dollar slipped on Thursday to stand just off recent peaks as cooling U.S. inflation data knocked down bond yields, while the yen hit a one-month high on rising bets on a rate hike in Japan.