The U.S. dollar climbed against its major rivals in the European session on Wednesday, after data showed that the nation's consumer price inflation improved in December, backing hopes for Fed rate hikes this year.

Data from the Labor Department showed that U.S. consumer prices increased in line with economist estimates in the month of December.

The Labor Department said its consumer price index rose by 0.3 percent in December after edging up by 0.2 percent in November.

Excluding food and energy prices, the core consumer price index crept up by 0.2 percent for the second consecutive month. The uptick in core prices also matched economist estimates.

Investors await the NAHB housing market index for January due at 10:00 am ET and the Federal Reserve's Beige Book report later in the day for more clues about the health of the economy.

Minneapolis Federal Reserve Bank President Kashkari is set to speak at Minneapolis Urban League at 10:00 am ET, while Federal Reserve Chair Janet Yellen will speak in San Francisco at 3:00 pm ET.

The currency has been trading in a positive territory in the Asian session.

The greenback bounced off to 1.0046 against the Swiss franc, from a low of 1.0011 hit at 5:45 pm ET. The greenback is likely to challenge resistance around the 1.03 zone.

The greenback, having fallen to 112.57 against the yen at 5:00 pm ET, reversed direction and was trading higher at 113.45. Continuation of the greenback's uptrend may see it challenging resistance around the 115.00 area.

The greenback reversed from an early session's low of 1.2417 against the pound and was trading up at 1.2283. The next possible resistance for the greenback is seen around the 1.21 mark.

Data from the Office for National Statistics showed that the U.K. unemployment rate remained stable in three months to November and people claiming unemployment benefits declined unexpectedly.

The unemployment rate came in at 4.8 percent, the lowest since September 2005 and matched economists' expectations.

The greenback edged up to 1.0655 against the euro, following a decline to 1.0715 at 5:00 pm ET. The greenback is seen finding resistance around the 1.05 region.

Final data from Eurostat showed that Eurozone inflation climbed as initially estimated in December.

Inflation rose to 1.1 percent in December from 0.6 percent in November.

The greenback bounced off to 1.3121 against the loonie, 0.7543 against the aussie and 0.7180 against the kiwi, from its early lows of 1.3038, 0.7567 and 0.7216, respectively. If the greenback extends rise, 1.33, 0.74 and 0.70 are likely seen as its next resistance levels against the loonie, the aussie and the kiwi, respectively.

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