The dollar index fell nearly 1% in the second quarter after gains of 3.6% in the first. In the third quarter, the dollar is on track to post a 2.1% rise
"The dollar is really going to struggle to hold onto gains," said Mazen Issa, senior foreign exchange strategist at TD Securities.
"The Fed has made it clear in no uncertain terms that they intend to look through transitory inflation factors and they are not perturbed by these moves," said Issa.
The dollar index was set to end the week flat, although still down 2.56% for the month as a whole.
Higher 0.2% on the day by midday in London, it had been on track for a four-week losing streak during Asian trading, which would have been the longest fall since a six-week slide to the end of last July.
"Until the bond market gets the heebie-jeebies over the inflation fears again I think the long dollar position remains under assault," he said.
Treasury yields have also fallen this week after the Treasury Department saw solid demand for new sales of three-, 10- and 30-year debt on Monday and Tuesday.