TOKYO - Stocks edged up in Asia on Wednesday while the dollar wobbled as relatively benign US inflation data fed into prospects of rate cuts by the Federal Reserve later this year even as investors were still gauging if the worst of the trade conflicts was over.

As US President Donald Trump's global trade war appeared to hit pause, led by a truce in the tariff spat between China and the United States, financial markets remained nervous about the outlook.

"I'm just a little bit cautious here about chasing the rally in stocks at this level," said IG analyst Tony Sycamore. "We've got to wait to see what happens with regards to headlines and the framework around further tariff negotiations with other countries, but you know at this point of time the worst-case scenario has been priced out."

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.9 percent in early trade after US stocks climbed back into positive territory for the year, erasing losses triggered by Trump's chaotic rollout of sweeping tariffs.

Equity futures pointed to retreats in both European and US markets.

Data overnight showing softer-than-expected US consumer inflation also provided some relief to investors worried about the inflationary impact of US tariff policies, which had severely undercut expectations of near term Fed rate cuts.

Though traders expect inflation to pick up as tariffs lift import costs, the uncertainty over the outlook remains as Washington moves ahead to strike deals with its trading partners.

Global sentiment turned up after a trade deal with the US and Britain last week, and improved further when US and China said on Monday they would pause their trade war for 90 days, bringing down reciprocal duties and removing other measures while they negotiate a more permanent arrangement.

Trump has also touted "potential deals" with India, Japan and South Korea.

The Fed has warned of rising economic uncertainty, signalling it's prepared to wait for some time to assess the impact of US tariffs before moving to cut interest rates again.

The US dollar, which has taken a beating recently on the back of the economic and policy uncertainty, dropped 0.2 percent against the yen to 147.13, and was little changed at $1.1186 against the euro. The dollar index was little changed after a 0.8 percent slide in the previous session.

Japan's Nikkei gauge slid 0.7 percent, trimming a 1.4 percent advance on Wednesday.

With the US inflation figures behind markets, the next major signal for US economic health is retail sales data for April due on Thursday. The same day, talks are planned between Ukraine and Russia in Istanbul with hopes of a ceasefire three years into the conflict.

Global asset managers held their biggest underweight position in the dollar in 19 years in May, as Trump's trade policy cut investor appetite for US assets, Bank of America's global fund manager survey (FMS) showed on Tuesday.

The yield on benchmark 10-year Treasury notes slid 2 basis points to 4.4768 percent.

US crude dipped 0.3 percent to $63.48 a barrel, while spot gold was slightly lower at $3244.79 per ounce.