The dollar showed mixed movement in the early afternoon hours Wednesday in New York, posting a multi-week low against the pound, while extending its gains against the euro. Against the yen, the buck began to climb back toward the 100 mark after weakening against the currency in the previous two days.

The move came as traders digested tame inflation data from the U.S., while awaiting figures from the housing sector later in the day. Traders also mulled over a better-than expected report from the manufacturing sector and data on increased foreign demand for U.S. securities.

Meanwhile, Eurozone reports remained dismal, raising the likelihood of action from the European Central Bank. In the U.K., housing data surprised analysts, showing some signs of life for the beleaguered sector.

The dollar added to its recent gains against the Eurozone currency but has slowed its move in recent minutes, posting a level of 1.3230. The dollar has recouped some of the week's losses against the euro, setting a two-day high earlier while creeping towards a multi-week high of 1.3102. The move came while a member of the European Central Bank dampened expectations about upcoming changes in monetary policy for the European Union.

The Governing Council member of the ECB, Axel Weber said there is still a little room to cut the main refinancing rate, but it should not go below 1 percent. In a speech in Hamburg, Weber said if the interest rate falls below 1 percent, banks will have no incentive to lend to each other, paralyzing interbank lending.

Meanwhile, Germany's Federal Statistical Office said in a report that the wholesale price index or WPI dropped 8 percent year-over-year in March, after falling 5.7 percent in February. Economists had predicted a decline of 7.1 percent for March. The wholesale prices in March showed the strongest annual decline since January 1987, the agency said.

The dollar-euro pair has seen choppy movement lately as economic prospects in both the U.S. and Eurozone remain murky amid mixed economic data. Overall, U.S. monetary policy has shifted quickly to combat the economic downturn, prompting the dollar's considerable gains against the euro this year.

Against the pound, the buck ceded considerable ground earlier, falling to a multi-week low of 1.5036. The greenback has stabilized, but continues to linger near its daily lows on the day, adding to losses which began earlier this week. The move into the pound came as the embattled housing sector in the U.K. showed a glimmer of hope.

U.K. housing figures showed that the average number of completed sales per surveyor for the preceding three month period increased in March to 9.7 from the record low February reading of 9.6, the first increase since October 2007.

Meanwhile, house prices in the UK dropped 12.3 percent year-on-year in February, after falling 11.5 percent in January, a report by the Department of Communities and Local Government said.

Meanwhile, the dollar posted gains against the yen after dipping below the 100 mark during the previous day. Moving into the early afternoon, the dollar is sitting at 99.3450 up from its overnight quote of 99.0250. With the climb, the dollar has rebounded from a 2-week low against the yen, moving toward a multi-month high of 101.44.

Japanese industrial production declined for the fifth consecutive month in February, a revised report from the Ministry of Economy, Trade and Industry showed. In February, production fell 9.4 percent month-on-month, in line with initial estimate. Output recorded an annual fall of 38.4 percent.

Earlier, investors looked to data from the U.S. Labor Department that showed its consumer price index edged down 0.1 percent in March following a 0.4 percent increase in February. The modest decrease came as a somewhat of a surprise to economists, who had expected prices to edge up 0.1 percent.

Separately, the New York Federal Reserve said its index of regional manufacturing activity rose to a negative 14.7 in April from a negative 38.2 in March, with a negative reading indicating a contraction. Economists had been expecting the index to edge up to a negative 35.0.

A report on Treasury International Capital showed that foreign purchases of long-term U.S. assets totaled $22 billion in the month of February after a revised decrease of $36.8 billion in the previous month.

Continuing weakness in overseas economies indicated by a slew of negative economic reports from the U.K., the European Union and Japan drove traders into the safety of the U.S. dollar and guaranteed returns in treasuries.

The foreign move into U.S. treasuries has been significant, as the U.S. government has looked to fund its record stimulus spending measures by considerably ramping up its bond offerings in recent months.

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