The US dollar is trading close to the lowest level seen in three weeks early on Wednesday, following the release of a higher than expected CPI reading in the previous session which failed to hike up market concerns about a spike in inflation as the US economy works its way towards recovery. At the time of writing, the US dollar index DXY is trading around 91.69.

Against other leading currencies, the greenback remains stuck in somewhat of a range around the 91 level. On Tuesday, the CPI report revealed that consumer prices across the US rose by 0.6% MoM and 2.6% YoY during March, coming in above economists’ expectations. The core CPI also beat expectations, rising to 1.6% YoY.

While there were expectations that a stronger reading could spur worries about higher inflation and send US Treasury yields, the release of the report in fact did the opposite. Robust demand during the 30-year Treasury note auction sent bond yields lower instead, exerting further downward pressure on the US dollar.

Worries about a rise in inflation are diminishing after repeated assurances by Fed officials that it would not affect the economy in the long term and would not require any intervention from the central bank. Analysts now expect the Fed to be tolerant about temporary spikes in inflation beyond their target instead of stepping in with a rate hike to manage it.