The dollar hit an 8-month low against the yen on Wednesday, on a growing market view that it needs to fall to correct imbalances in the global economy. A weak reading in the U.S. consumer price index for April, due at 1230 GMT, could reinforce market expectations that the Federal Reserve will not raise interest rates in June after tightening credit at 16 consecutive policy meetings. "Dollar/yen has broken to new lows. There's a longer-term perception in the market that the dollar has to go down as part of the route to remove structural imbalances, which are greatest between Asia and the United States. The trend is continuing," said Adam Cole, senior currency strategist at Royal Bank of Canada. "Inflation data is critical to rate expectations. A soft core CPI number would take out residual expectations of a June rate hike. The dollar would take another leg down," he added. The yen got a lift after European Central Bank Governing Council member Christian Noyer told Reuters on Tuesday that more currency flexibility was desirable in Asia, echoing a call made by Group of Seven powers last month for Asian currencies to rise. By 0955 GMT, the dollar was down around half a percent at 109.12 yen, briefly hitting its lowest level since September 2005 at 108.99, after Japanese Finance Minister Sadakazu Tanigaki said there was no change in Japan's stance on foreign exchange. The euro was up a third of a percent at $1.2904 . The single currency rose to the day's highs of $1.2920 after euro zone final inflation came in at 2.4 percent in April, above 2.2 percent in March, as the core rate accelerated to 1.5 percent. Some analysts see a signficant chance of a 50 basis point euro zone rate rise in June, from the current 2.5 percent. The euro fell against the yen, hitting a 7-week low at 140.58 yen