The dollar eased back on Wednesday from its biggest rise in three weeks the previous session, as traders awaited U.S. inflation data and minutes from the Bank of England's November meeting for further direction.

The dollar had rallied on Tuesday on the back of rare comments on the currency by U.S. Federal Reserve Chairman Ben Bernanke, comments later echoed by other Fed officials and European Central Bank President Jean-Claude Trichet.

That pushed the euro well below $1.50, but most dealers say the dollar's gradual, longer-term decline is still intact.

Although the Fed may be in the very early stages of withdrawing its huge stimulus measures -- it said on Tuesday it will pare back its the discount window borrowing facility -- it is still nowhere near raising interest rates.

U.S. inflation data for October and BoE minutes of its November policy meeting, which will shed light on how unanimous or otherwise policymakers' vote to extend quantitative easing was, could give an otherwise quiet market direction.

The Fed's relatively sanguine view on the dollar (although acknowledgement that it is an input into their monetary policy decision makings), coupled with the belief that asset prices are not forming another bubble, should provide a green light for recent trends to continue, said Lauren Rosborough, senior currency strategist at Westpac in London.

That said, some markets remain wary and on a technical basis, the 'bull' trade is not as strong as it was, she said.

At 0830 GMT the dollar index .DXY =USD was down a quarter of percent on the day at 75.19, after gaining 0.6 percent on Tuesday, its biggest one-day rise since Oct. 26. On Monday it struck a 15-month low of 74.679.

The euro EUR= was up a third of a percent at $1.4915, up over a cent from Tuesday's intraday low of $1.4806. Dealers noted that the rebound meant a large $1.48-$1.51 double no touch options structure rolling off on Friday remained alive.

The dollar was down a quarter of a percent against the yen at 89.10 yen JPY=, back within sight of its one-month low of of 88.73 yen struck on Tuesday.


Traders also continued to digest U.S. President Barack Obama's visit to China, where he had talks with Premier Wen Jiabao on Wednesday, although few expect any near-term changes in Beijing's foreign exchange policy.

Obama on Tuesday made plain in a summit with President Hu Jintao that one of his topmost concerns was China's currency policy.

Aside from the dollar, traders' main focus in European session is likely to be sterling and the signals for BoE policy how from the minutes of its Nov. 4-5 Monetary Policy Committee meeting at 0930 GMT.

Investors hope to find out whether the central bank really might consider more economic stimulus, or whether its quantitative easing programme is now drawing to a close.

The BoE is likely to err on the dovish side and comments on more QE could trigger some long liquidation, especially with the short-term market long of sterling, said Russell Bloom, strategist at Action Economics in London.

However, recent cable pullbacks have only provided better levels for sovereign wealth funds and corporate accounts, and it's likely that any corrective action will encourage more longs, with $1.70 a realistic target as the market eyes more reflation trades, he said.

Sterling was last flat on the day at $1.6804 GBP=D4, while the euro was up a third of a percent against the pound at 88.71 pence EURGBP=.

Other data due later on Wednesday includes U.S. consumer price index and housing market data for October due at 1330 GMT. ECONUS

Economists surveyed by Reuters expect a 0.2 percent rise, a repeat of the September increase. Excluding volatile food and energy items, the CPI is expected to rise 0.1 percent compared with a 0.2 percent increase in September.