The Dollar rose to a two-month high on Wednesday as data revealed European inflation is cooling quicker than forecast whilst China's recovery is stalling.

At the time of writing, the Euro was down 0.67% at $1.066, a low not seen since 20th March. This helped the Dollar index – measuring the greenback against six rivals – to edge up 0.51% to 104.6, the highest since 16th March.

Data published on Wednesday showed inflation in France is slowing rapidly, as well as some of the biggest states in Germany, Reuters reports. According to analysts, the data reduces the pressure on the European Central Bank to continue hiking rates, impacting the single currency's appeal in relation to the Dollar.

Inflation cooled down this month in France to a year-low as energy and food price hikes tempered.

"European inflation is rolling back now, and you're taking back some of the previously anticipated hikes from the ECB," stated chief strategist at European Bank SEB, Carl Hammer.

In addition, weak economic data from China also gave the greenback a boost, according to analysts. China's factory activity contracted faster than forecast this month, underscoring the country's pandemic recovery is waning, the Reuters report adds.

Moreover, the data heavily impacted the Australian and New Zealand Dollars.

The Aussie declined to its lowest since the middle of November to $0.648, whilst the Chinese Yuan also fell to a six-month low of 7.129 per Dollar.

"All else being equal, a weak China is a positive for the US Dollar, and to some extent the Yen, against the Euro or the Aussie," according to Shusuke Yamada, chief FX and rates strategist at Bank of America in Tokyo.

Elsewhere, the Pound was down 0.42% at the time of writing to $1.236. Whilst in Turkey, the Lira plummeted to an all-time low of 20.75 per Dollar following President Tayyip Erdogan's election win on Sunday.