TOKYO (Reuters) -The U.S. dollar stabilised on Wednesday following its biggest decline in more than three weeks overnight, with softer-than-expected U.S. consumer inflation data bolstering the case for Federal Reserve easing just as global trade tensions cool.

The Labor Department said the consumer price index increased 0.2% last month, below expectations of economists polled by Reuters for a 0.3% gain, after dipping 0.1% in March.

At the same time, inflation is likely to pick up in the coming months as U.S. tariffs lift the cost of imported goods, although the outlook for U.S. trade has improved following an agreement with Britain last week and weekend talks with China that yielded a 90-day truce in their tit-for-tat tariff war.

U.S. President Donald Trump said earlier this month he has "potential deals" with India, Japan and South Korea.

The U.S. dollar index, which measures the currency against six major peers, was flat at 100.94 as of 0042 GMT, following a 0.8% slide on Tuesday.

The index had jumped 1% on Monday and touched a one-month peak on optimism that a de-escalation in Sino-U.S. trade tensions would avert a potential global recession.

The dollar was steady at 147.45 yen, while the euro and sterling were little changed at $1.1188 and $1.3311, respectively.

The dollar was flat at 0.8390 Swiss franc, and held at 7.1928 Chinese yuan in offshore markets, after dipping to a six-month low of 7.1791 yuan on Tuesday.

"Despite the easing of the USD overnight, we consider there is more upside to the USD in the near term as market participants reassess the outlook for the U.S. and global economies following the temporary U.S.-China trade deal," Commonwealth Bank of Australia analysts wrote in a client note, predicting a 2-3% rise in the dollar index over "the next few weeks."

However, "we do not expect a full recovery in the USD back to levels traded at the start of the year," when the dollar index was around 108.50, the analysts said. "Erratic policy making in the U.S. has probably caused some permanent damage to the USD's status as a safe-haven currency."

The dollar is still some 3% below its level on April 2, when Trump announced his "Liberation Day" tariffs, triggering a flight by overseas investors from U.S. stocks and bonds.

Global asset managers held their biggest underweight position in the dollar in 19 years in May, Bank of America's global fund manager survey (FMS) showed on Tuesday.

The U.S. Federal Reserve has adopted a wait-and-see stance on the economic fallout from Trump's tariff campaign before cutting interest rates again.

Traders currently price in about 50 basis points of rate reductions between now and the end of the year, according to LSEG data, with the next quarter-point cut seen in September.