Following the rebound seen during trading on Tuesday, the value of the U.S. dollar is extending Monday's slump during trading on Wednesday.

The U.S. dollar index has slid 0.94 points or 0.9 percent to 106.07, pulling back well off last Friday's two-year highs.

The greenback has shown a significant move to the downside versus the Japanese yen, tumbling to 151.11 compared to the 153.08 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0565 compared to yesterday's $1.0489.

The weakness in the value of the dollar comes amid lingering concerns about President-elect Donald Trump's to impose increased sanctions on Mexico, Canada and China and the possibility about a wider trade war.

Traders were also reacting to the Commerce Department's closely watched consumer price inflation data that matched expectations.

The Commerce Department said its personal consumption expenditures (PCE) price index rose by 0.2 percent in October, matching the uptick seen in September as well as economist estimates.

The annual rate of growth by the PCE price index accelerated to 2.3 percent in October from 2.1 percent in September, which was also in line with expectations.

Excluding food and energy prices, the core PCE price index climbed by 0.3 percent in October, matching the increase seen in September as well as economist estimates.

The annual rate of growth by the core PCE price index crept up to 2.8 percent in October from 2.7 percent in September, which was also in line with expectations.

"Whilst the CME Fedwatch tool suggests markets still broadly expect a further rate cut from the Federal Reserve next month, there is a concern that the pace of cuts is likely to slow as central bankers respond to the sticky nature of prices in core areas as well as fears about how Trump's tariffs might impact the U.S. consumer," said AJ Bell head of financial analysis Danni Hewson.

The inflation readings, which are preferred by the Federal Reserve, largely overshadowed a slew of other U.S. economic data.

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