After plunging overnight, the dollar stalled at widely lower levels on Wednesday as expectations that the Federal Reserve has completed its cycle of monetary tightening were reinforced by an unexpectedly softening U.S. inflation report.

The euro is currently trading slightly below its Tuesday peak, which was reached after the dollar's sell-off propelled a surge in many of its rival currencies.

U.S. consumer prices figures were stable in October and the annual rise in underlying inflation was the lowest in two years was the catalyst for the frenzied action in the currency market. The CPI increased 3.2% in the 12 months ending in October, which was less than predicted by economists, following a 3.7% increase in September.

In response to the sudden change in market pricing, traders sent the dollar down 1.5% against key currencies overnight. The dollar was strengthened at the same time that U.S. Treasury yields fell.

The dollar index that gauges the greenback versus its major pairs, was recently trading at 104.14 close to its two-month low of 103.98 on Tuesday.

EUR/USD closed at $1.08725, having reached its highest level since August the day before.

GBP/USD was trading at $1.2489, close to September's peak.

USD/JPY inched up to 150.68, as data showed that Japan's economy shrank between July and September, making the central bank's plans to gradually remove its extremely loose monetary policy more difficult.