The dollar index traded around 96.981, above the two-week low set on Tuesday of 96.387 and down around 4 percent from a near 12-year high of 100.39 hit in March, according to Reuters.
"The debate regarding the dollar is consolidation or correction. There is a sense prevailing in the equity market regarding the extent to which low rates can continue to power stocks higher," said chief economist at FXPro, Simon Smith.
Investors are also concerned that the negative impact of the strong dollar will hurt the coming first-quarter results, which are expected to be the first negative reports since 2009.
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Low energy prices continue to weigh. Brent crude oil steadied above $55 a barrel on Wednesday, not far above the week's lows, while U.S. crude slipped to trade near $47.40.
Chicago Fed President Charles Evans said that policymakers need to be "confident" that inflation is heading towards 2 percent before raising rates. Otherwise, there is "no compelling reason" to hike interest rates, he said.
Weekly mortgage applications for the week ended March 20 rose 9.5 percent from the previous week to the highest level since January, the Mortgage Bankers Association said on Wednesday.
February's durable goods orders fell 1.4 percent, missing expectations of a modest pick-up. The core non-defense capital goods orders excluding aircraft also fell 1.4 percent last month. The report marked the sixth straight month of declines, likely weighed down by the strong dollar and weak global demand.
Paychex reported earnings in line with estimates and revenue slightly above estimates. PVH, Red Hat and Five Below report after the bell.
Kraft Foods will merge with Heinz to form Kraft Heinz, with Heinz shareholders owning 51 percent of the combined company and Kraft shareholders owning 49 percent. Kraft shareholders will also receive a special dividend of $16.50 per share.
American Express CEO Ken Chenault outlines the financial services giant's future plans in a presentation to investors today. American Express has faced bumpy times in recent months, including the loss of its long-standing partnership with Costco.
Facebook kicks off its annual developer conference today, with CEO Mark Zuckerberg among the speakers. The conference will run for two days instead of one for the first time.
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The Consumer Products Safety Commission will hold a teleconference this morning on the safety concerns raised about the Lumber Liquidators' flooring products in a recent "60 Minutes" segment. The teleconference is set for 10 a.m. EDT.
European equities traded lower on Wednesday, following a lackluster lead from Asia and Wall Street, despite better-than-expected data from Germany.
Elsewhere, Greece risks running out of cash by April 20 unless it secures fresh aid, a source familiar with the matter told Reuters on Tuesday, leaving it little time to convince skeptical creditors it is committed to economic reform.
—CNBC's Peter Schacknow contributed to this report.