The U.S. dollar edged higher in early European trade Wednesday, stabilizing after the previous session's sharp declines as investors look for clues on the path for Federal Reserve policy.

At 03:00 ET (07:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 103.525, rebounding after dropping 0.4% the previous session, its worst day in a month and a half.

The greenback slumped on Tuesday, pulling back sharply from a near three-month high, as markets bet after the release of data showing JOLTS job openings fell to a 2-1/2 year low in July, prompting traders to pare bets for further interest rate hikes by the Federal Reserve this year.

EUR/USD fell 0.1% to 1.0873, handing back some of the 0.6% overnight rally, after German import prices fell by 13.2% year on year in July, the sharpest drop since January 1987.

Elsewhere, GBP/USD fell 0.1% to 1.2633, with sterling struggling after property website Zoopla forecast that the number of house purchases in Britain this year is on course to drop by 21% to its lowest since 2012 as a result of rising borrowing costs.

USD/JPY rose 0.3% to 146.36, having surged to a 10-month peak at 147.375 on Tuesday, before retreating on the JOLTS report. These levels prompted yen buying intervention by Japanese officials last autumn.

AUD/USD fell 0.2% to 0.6467 after consumer price index inflation data read weaker than expected for July, while USD/CNY rose 0.2% to 7.2917 ahead of the release of key purchasing managers' index data on Thursday.

Source : Investing.com