The U.S. dollar weakened against most other major currencies in the Asian session on Wednesday, as traders bet that the Federal Reserve is likely to raise interest rates slowly.

Federal Reserve Chair Janet Yellen said last Friday an interest rate hike may well be warranted later this year but stressed that any increase in interest rates would be gradual.

"With continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year," Yellen said at San Francisco Fed conference.

Traders are closely awaiting for the monthly U.S. non-farm payroll report, due on April 3, for clues on the timing of a rate increase.

The ADP National Employment Report is slated to release the U.S. private sector employment data later in the day. The U.S. private sector employment data may give some clues to Friday's non-farm payroll report.

In a speech to the Greater Richmond Chamber of Commerce, U.S. Federal Reserve Bank of Richmond President Jeffrey Lacker stated that a strong case can be made for an increase in interest rates relatively soon.

Lacker said he believes a strong case can be made for an increase in interest rates relatively soon. Lacker said the Fed's June meeting will likely be an appropriate time to raise rates, arguing that recent signs of economic weakness are transitory and due to the rough winter weather.

Tuesday, the U.S. dollar rose against its major rivals. The U.S. dollar rose 0.93 percent against the euro, 0.69 percent against the Swiss franc and 0.10 percent against the yen.

In the Asian trading today, the U.S. dollar fell to 2-day lows of 1.2644 against the Canadian dollar and 1.4871 against the pound, from yesterday's closing quotes of 1.2682 and 1.4813, respectively. If the greenback extends its downtrend, it is likely to find support around 1.23 against the loonie and 1.51 against the pound.

Pulling away from an early near 2-week high of 0.7439 against the NZ dollar, the greenback edged down to 0.7489. At yesterday's close, the pair was trading at 0.7460. On the downside, 0.77 is seen as the next support level for the greenback.

Against the euro, the Swiss franc and the Australian dollar, the greenback edged down to 1.0791, 0.9628 and 0.7662 from yesterday's closing quotes of 1.0730, 0.9719 and 0.7605, respectively. The greenback may test support near 1.13 against the euro, 0.92 against the franc and 0.79 against the aussie. Looking ahead, PMI reports for March from major European economies are due in the European session.

In the New York session, U.S. ADP private sector employment data, U.S. ISM manufacturing PMI and Canada RBC manufacturing PMI- all for March are slated for release.

At 9:00 am ET, U.S. Federal Reserve Bank of San Francisco President John Williams will participate in a panel discussion titled "Financial Stability: How Essential Financial Stability be to Central Banks?" at the Federal Reserve Bank of Atlanta's financial markets conference "Central Banking in the Shadows: Monetary Policy and Financial Stability Post crisis," in Stone Mountain.

About an hour and a half later, at the same conference in Stone Mountain, U.S. Federal Reserve Bank of Atlanta President Dennis Lockhart will participate in a panel discussion titled "Monetary Policy: Will the Traditional Banking Channel Remain Central to Monetary Policy?".

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