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The U.S. dollar held steady against a handful of rival currencies on Wednesday, as traders weighed what impact hotter-than-expected inflation data could have on chances of an interest rate cut at the Federal Reserve's June meeting.

The U.S. consumer price index (CPI) increased solidly in February, beating forecasts and suggesting some stickiness in inflation.

Although the CPI rose 0.4% in February in line with forecasts, a 3.2% year-on-year gain came in just ahead of an expected 3.1% increase. Core figures also topped estimates.

That has left analysts wondering whether the Fed will have sufficient data to justify more than a couple of rate cuts all year.

Still, market expectations for rate cuts to begin at the Fed's June 11-12 meeting have eased only a touch to about a 67% likelihood versus 71% earlier in the week, according to the CME Group's FedWatch Tool.

"(Fed Chair) Powell might now regret speaking of cuts during his testimony last week, as I suspect it explains why Fed Fund futures are still pricing in a June cut," said Matt Simpson, senior market analyst at City Index.

"As the U.S. dollar handed back most of its post-CPI gains, I suspect the rebound in the U.S. yield curve provides the more accurate picture; a June cut is less likely." [US/]

Still, with many of the greenback's peer currencies holding close to flat, it suggests traders are taking the latest data in stride, he added.

The dollar index, which measures the greenback against a basket of peer currencies, was little changed at 102.91.

Attention now turns to U.S. retail sales, an indication of consumer spending which has been resilient so far, and producer prices due out later this week.

Against the yen, the dollar eased 0.15% to 147.43, giving the Japanese currency some relief after it saw its biggest fall in a month on Tuesday following Bank of Japan Governor Kazuo Ueda's slightly bleaker assessment of the nation's economy.

Traders are now looking to the initial estimates of spring wage negotiations to be announced on Friday, which will be crucial for the BOJ's policy calculations on whether to exit negative interest rates at its meeting on March 18-19.

The country's largest trade union confederation has demanded pay rises of 5.85% this year, surpassing 5% for the first time in 30 years.

Elsewhere, analysts expect the European Central Bank to announce on Wednesday the outcome of discussions on the Eurosystem’s operational framework review, which has kept rates at zero or lower and flooded banks with cash via bond purchases and loans.

The euro was mostly flat at $1.0925, and so was sterling at $1.2793.

In cryptocurrencies, bitcoin was up 0.58% at $71,478.00, remaining below the record high set on Monday.

Ether rose 0.82% to $3,983.30, not far from Tuesday's peak of $4,095.40, its highest since 2021.