© Reuters. FILE PHOTO: Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking/File Photo

By Iain Withers

LONDON (Reuters) – The dollar was broadly flat against major currencies, as traders trained their sights on the release of Federal Reserve minutes later on Wednesday and a key inflation print the next day for hints on the future path for interest rates.

U.S. Treasury yields continued to slide, pinning the dollar close to two-week lows as markets digest recent comments from policymakers that the Fed may not need to tighten monetary policy further.

Investors were also keeping a close eye on the conflict between Israel and Palestinian Islamist group Hamas, with some signs of safe haven market moves in recent days.

The benchmark dropped ten basis points, extending declines from Tuesday after a sharp sell-off in September left bonds cheap.

The – which tracks the greenback against six major currencies – edged up 0.1% to 105.82, after dipping earlier in the session to a two-week low of 105.6. The index had closed lower over the previous five trading sessions.

“U.S. yields continued to correct lower on expectations the Fed will let markets do the tightening and refrain from hiking again,” ING analysts said in a note.

“We suspect, however, that further bond rallies might put a hike back on the table, and limit USD losses.”

The minutes from the Fed’s September policy meeting are due later on Wednesday.

On Tuesday, Atlanta Fed Bank President Raphael Bostic said the central bank did not need to raise borrowing costs any further, while Minneapolis Fed President Neel Kashkari said it was “possible” that further hikes might not be needed.

Sterling briefly rose to a three-week high of $1.23035 and was last flat at $1.22910. The euro was at $1.06005, not far from a more than two-week top of $1.06280 hit earlier in the session.

Euro zone households see inflation staying slightly above the European Central Bank’s (ECB) 2% target for another three years, an ECB survey on Wednesday showed, as rate-setters struggle to convince the public their plans to tame prices are on track.

The European Central Bank has made “important progress” in getting inflation back down to target but there is still a long road ahead and a further rate hike cannot be ruled out, Dutch central bank chief Klaas Knot said on Wednesday.