On Thursday, economic data showed that producer prices increased 0.4% last month on a year-over-year basis. Economists polled by Reuters had forecast the CPI surging 0.6 percent in September. Underlying inflation remained muted.
The dollar index, which measures the greenback against six major peers, was down 0.30 per cent at 93.008 in late trading.
The index, which logged it's first monthly gain in seven months in September, rose to more than a 10-week high last week, after U.S. wage data for September was seen as a sign that inflation might come off a recent period of weakness.
Meanwhile, sterling jumped by more than a cent to reach an eight-day high against the United States dollar, with analysts citing a report in Germany's Handelsblatt newspaper that the European Union could offer Britain a two-year transitional Brexit deal.
The Fed next meets October 31 and November 1, but investors expect that the Fed will not raise its benchmark rate before its final meeting of the year, in December.
Financial markets are pricing a roughly 88 percent probability of a rate increase in December, according to CME Group's FedWatch tool.
"Many participants expressed concern that the low inflation readings this year might reflect. the influence of developments that could prove more persistent, and it was noted that some patience in removing policy accommodation while assessing trends in inflation was warranted", Reuters reported, citing the Fed's meeting minutes.
The weaker dollar helped buoy Britain's pound to a almost two-week high against the dollar.
In late NY trading on Wednesday, the euro increased to $1.1856 from $1.1807 in the previous session, and the British pound increased to $1.3218 from $1.3204 in the previous session, Xinhua news agency reported.
Sterling, which earlier skidded as Germany told Britain "time is running out" to get the deal it wants on Brexit, rebounded to trade up 0.32 percent at $1.3302.