The Dollar was on course for monthly gains on Thursday ahead of the US core personal consumption expenditures (PCE) price index data due out later in the day.

As the Federal Reserve's preferred measure of US inflation, forecasts are for a 0.4% rise in the PCE month-on-month.

Investors predicted just a 0.2% increase not so long ago, but elevated readings on producer and consumer prices signal the risk could be for a high of 0.5%, Reuters reports.

"A stronger than expected PCE deflator can cause markets to reduce pricing for a May rate cut even further, supporting US Dollar," said currency strategist at Commonwealth Bank of Australia, Kristina Clifton.

As it stands, markets are pricing in around a 20% chance the Fed will begin easing in May, with the likely timing of a cut now forecast to be in June. Futures indicate three 25 basis point cuts in 2024, compared to five at the beginning of February.

Furthermore, the greenback declined 0.66% against the Japanese Yen at 149.75. This followed upbeat comments from Bank of Japan board member, Hajime Takata on prospects the bank could reach the 2% inflation target, ending negative rates.

Should the fall continue, it would be the Dollar's largest daily decline against the Yen this year.

That said, USD is still 1.8% up on the Yen in February.

"Takata's remarks should add to conviction that an earlier than expected hike at the March meeting should not be ruled out," said Christopher Wong, currency strategist at OCBC.

"With JPY shorts at record highs, unwinding of shorts should see JPY bears run for cover."

Elsewhere, the Euro was up 0.1% at $1.0847 whilst Sterling stood at $1.2670, the Reuters report adds.

Whereas in Australia, the Aussie gained 0.14% to $0.6504 on Thursday, whilst the New Zealand Dollar was nursing losses at $0.6091, after falling 1.2% the day before as the central bank held rates steady.