The figures showed supply bottlenecks and price pressures were reduced, and supported the view that the economy is not in a recession.
Federal Reserve officials again expressed their determination to curb high inflationalthough one of them pointed out that a half-point increase in key interest rates from the US central bank next month could be enough.
The dollar had risen on Tuesday after three top Fed officials said the central bank remains “completely united” in raising rates to a level that would put a dent in America’s highest inflation since the 1990s. 1980.
“The Federal Reserve is tempering expectations of rate hikes, and that has helped push the dollar higher,” said Adam Button, chief currency analyst at ForexLive in Toronto.
The monthly data on employment in the United Statess, to be released on Friday, will also help set the tone for the dollar, according to analysts.
The dollar index, which compares the greenback to its six major peers, was trading almost flat at 106.40. The index had dipped slightly before the services report.
The dollar index, which continues to rise strongly so far this year, had weakened recently as investors began to revisit the aggressiveness of the Federal Reserve with rate hikes.
Against the yen, the dollar rose 0.6% to 134.05 yen.
The euro reversed gains and was trading stable at US$1.0165. Business activity and retail sales in the euro zone fell in monthly rate