The dollar struggled to lift off a five-month low against other major currencies on Wednesday, as traders digested tit-for-tat US-EU tariffs and a potential Russia-Ukraine ceasefire, while awaiting US inflation data amid worries about the economy.

President Donald Trump's unpredictable announcements on trade policy have whipsawed markets and drawn tariff retaliation from trading partners, ramping up a global trade war.

The European Union will impose counter tariffs on 26-billion euros ($28.39-billion) worth of US goods from April, the European Commission said on Wednesday, in response to blanket US tariffs on steel and aluminium that came into force earlier in the day.

"There are so many, so many moving parts," said Kenneth Broux, head of corporate research FX and rates at Societe Generale.

"We're not seeing any safe haven in European assets this morning because of retaliation of the trade war," Broux added.

The euro eased after hitting a five-month peak of $1.0947 on Tuesday as Ukraine said it was ready to support Washington's proposal for a 30-day ceasefire with Russia. The ball is now in Moscow's court.

The Kremlin said on Wednesday it was waiting for details from the US, while senior Moscow sources said a deal would have to take account of Russia's advances and address its concerns.

The euro traded 0.15% lower at $1.0902 in midday European trading.

Europe's single currency has been flying high on the promise of massive fiscal spending by Germany, although the situation has become more complex after the Greens vowed to block those plans and unveiled rival proposals.

That remains the "overarching story" for the euro, Broux said.

SOURCE OF VOLATILITY

The Canadian dollar was steady after a volatile session on Tuesday, when Trump pledged to double tariffs on steel and aluminium to 50%, only to reverse course just hours later.

The Bank of Canada decides policy later on Wednesday, with traders expecting another quarter-point interest rate cut.

The greenback edged lower to C$1.4415.

Canada will announce C$29.8-billion in retaliatory tariffs on the United States on Wednesday, a Canadian official, who declined to be named, said.

"Trade uncertainty persists and therefore so does market volatility," said Kyle Rodda, senior financial markets analyst at Capital.com.

"The US growth outlook continues to deteriorate," Rodda added, pointing to increased attention on the release of the consumer price index (CPI) later in the day, which he warned "could be a significant source of volatility".

The US dollar index, which measures the currency against a basket of six others, edged up 0.1% to 103.6, following Tuesday's slide of 0.46% that took it to its lowest since October 16.

Investors have been on edge since Trump avoided ruling out the possibility that a recession would result from his trade policies in an interview on Sunday with Fox News.

Wednesday's CPI report may be setting the market up for "a lose-lose situation", said Julien Lafargue, chief market strategist at Barclays Private Bank.

"A higher-than-expected reading could fuel the stagflation narrative while a weaker-than-expected print could cement recession fears," Lafargue said.

"What the market really needs at this point is better visibility on growth rather than on inflation."

The United States also resumed military aid and intelligence to Kyiv.

Increased optimism for an end to the war in Ukraine lifted the Swiss franc, which firmed to as much as 0.8840 per dollar before paring gains.

Sterling steadied at $1.2942, just below a four-month high of $1.29655 hit in the previous session.

The dollar gained 0.6% to 148.74 yen, after sinking to a five-month trough of 146.545 yen in the prior session.

"We're waiting for Friday for these trade union agreements in Japan," Broux said, calling the dollar's strength against the yen despite tighter bond spreads on Wednesday "a bit of a mystery".

Many of Japan's biggest companies have met union demands for substantial wage hikes for a third consecutive year, seeking to help workers cope with inflation and retain staff amid labour shortages. But it's unclear whether the hikes will be strong enough to spur consumer spending and encourage the Bank of Japan to increase its policy rate, still at a low 0.5%, more aggressively.