. By Gina – The dollar was down on Wednesday morning in Asia, as U.S. bond yields fell and investors retreated from aggressive expectations that the U.S. Federal Reserve will tighten its policy earlier than expected.The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.02% to 92.330 by 12:51 AM ET (4:51 AM GMT). The index hovered near a two-week low, slipping further from a five-month high of 93.439 set on Mar. 31.The USD/JPY pair inched down 0.01% to 109.73 continuing its decline from the one-year high of 110.97 reached during the previous week.The AUD/USD pair inched down 0.08% to 0.7655 and the NZD/USD pair inched down 0.01% to 0.7056.The USD/CNY pair inched up 0.05% to 6.5403. Investors digested the Caixin services Purchasing Managers Index released by China on Tuesday, with March’s reading at 54.3, higher than February’s 51.5 reading. China will release inflation data, including the Consumer Price and Producer Price indexes, on Friday.The GBP/USD pair inched up 0.04% to 1.3829.A rosier economic outlook, with U.S. economic growth and inflation both accelerating, could see the Fed tightening its policy earlier than indicated. Interest rate futures earlier in the week priced in a rate hike as early as late 2022.Investors now await the minutes from the Fed’s March meeting later in the day, and chairman Jerome Powell’s remarks at a panel about the global economy a day later.Meanwhile, U.S. Treasury yields also fell, with the five-year note dropping sharply to 0.874% after hitting a 14-month high of 0.988% on Monday. The note is now viewed as a major barometer of how much faith investors have in the Fed's pledge that it does not expect to raise interest rates until 2024.Some investors view the dollar's retreat as a correction after its rally in February. Against the yen particularly, the greenback recorded its biggest monthly gains in more than four years in March, rising almost 4%."Last quarter, the dollar got a boost from the Senate runoff in Georgia, Biden administration's COVID-19 relief package and then infrastructure plan. This quarter we are running out of such big themes and the market will be looking to economic fundamentals. We expect the dollar to remain strong, but it is unlikely to rise as much as it did last quarter," Barclays (LON:BARC) senior currency strategist Shinichiro Kadota told .On the cryptocurrency front, Bitcoin was flat at $57,966.