NEW YORK- The dollar fell from a one-week high on Wednesday, as political wrangling over a stimulus package for the U.S. economy halted its recent rebound.

The greenback, however, rose to a three-week peak against the yen, climbing for a fourth straight session. The dollar/yen pair typically moves in tandem with U.S. Treasury yields, with the 10-year advancing to a one-month high.

Stronger-than-expected U.S. CPI numbers, meanwhile, briefly lifted the dollar against a basket of currencies.

Data showed the U.S. consumer price index rose 0.6% last month after rebounding 0.6% in June. Excluding the volatile food and energy components, the CPI jumped 0.6% last month. That was the largest gain since January 1991 and followed a 0.2% rise in June. 

But the market's focus was on the U.S. stimulus package. Investors are watching for signs a political impasse in Washington over a further rescue package for the pandemic-hit economy can be overcome.

U.S. Treasury Secretary Steven Mnuchin said on Wednesday that the White House and top Democrats in Congress may not be able to reach a deal on coronavirus aid, in the fifth day without talks on the stalemate blocking relief to tens of millions of Americans. 

"Over the longer-term, the fact that there is no stimulus package is a good thing for the dollar. If we're going to print another $3.5 trillion, that's bad for the dollar," said Ronald Simpson, managing director, global currency analysis at Action Economics in Florida.

But he added that the fact there's a stalemate in negotiations is a negative for the dollar in the short-term.

In mid-morning trading, the dollar index, which has held above a two-year low hit last Thursday, was down 0.3% against a basket of currencies at 93.390 , after shedding gains made in Asian trading.

"If there is no movement in the negotiations soon, the Fed's concerns are quite likely to have an impact on the dollar sooner or later," FX analysts at Commerzbank said in a note.

Against the yen, the dollar rose 0.3% to 106.77 yen .

Improved U.S. debt yields have pressured the yen by luring investment from zero-yielding Japan.

The euro was up 0.5% at $1.1793.

Sterling was broadly flat, despite data showing the British economy had entered a deep recession, as signs of a recovery in June provided some support for the currency. 

The New Zealand dollar was flat at US$0.6576, after the country's central bank held rates but surprised markets by extending its bond-buying programme and putting slightly more emphasis on the possibility of negative rates. 

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Iain Withers in London; Editing by Bernadette Baum) ((gertrude.chavez@thomsonreuters.com; 646-301-4124; Reuters Messaging: rm://gertrude.chavez.reuters.com@reuters.net))