The Dollar climbed to a one-month high against the Yen on Wednesday after government data showed an unexpected rise in US retail sales last month, easing concern that the US economy will fall into a recession. UsdJpy jumped after the data, rising to a one-month high of 108.37 before easing to 108.27, up 0.87%. Even at current levels, the Dollar remains in a downward trend that began in June 2007, when it rose at 124.14 high. Some analysts also said the unexpectedly positive sales report does not alter the big-picture view of slowing US consumer spending undermining the Dollar.

EurUsd was down 0.18% at 1.4554 after hitting a session low at 1.4532. EurJpy rose 0.68% to 157.60. GbpUsd was up 0.11% at 1.9619, in a seesaw session. The Bank of England said in a quarterly inflation report that it would overshoot its 2% inflation target if it cuts rates too quickly.

Analysts said the Dollar could run out of steam as traders scale back positions ahead of Thursday's testimony by Fed Chairman Ben Bernanke, who may signal more rate cuts to come. Since September, the Fed has slashed benchmark interest by 225bp to 3%. Some investors have said this aggressive easing may be helping to keep the economy out of a recession.

Based on interest rate futures, markets expect the Fed to reduce its benchmark interest rate to as low as 2% this year. Analyst said that is probably a little bit further than the Fed wants to go. But Bernanke is unlikely to delve into such details on Thursday.