Investing.com – European and Asian currencies were mostly lower on Monday, while the dollar settled in weak trading, as markets await more signals on US interest rates from key inflation data later in the week.
Market holidays in the US and UK kept trading volumes limited.
Most regional currencies suffered some losses from last week after a series of statements from Federal Reserve officials that saw traders reassess their timelines for potential interest rate cuts by the central bank later this year.
The dollar stabilizes, and awaits personal consumption expenditure inflation
, which measures the currency against a basket of its peers, is mostly unchanged in European trade. The US currency has strengthened in recent sessions, supported by traders' repricing of their expectations for future interest rate cuts by the Federal Reserve.
Policymakers have raised doubts about the sustainability of the slowdown in price pressures in the United States, raising bets that the Federal Reserve may eventually choose to leave interest rates at their highest levels in more than two decades for a longer period of time, according to a report.
This week, traders are now focusing on the data – the Fed's preferred measure of inflation – which is due on Friday.
The Euro is hovering around a flat line as the ECB decision approaches
The euro did not waver far from the flat line against the dollar on Monday, rising about 0.1% to $1.0850 by 04:11 ET (08:11 GMT).
Inflation data from the euro zone is also due to be released later this week, with economists forecasting that prices rose at a slightly faster annual rate in May than the previous month. These numbers could influence how the ECB handles future interest rate policy decisions this year.
Buoyed by data showing previous euro zone inflation figures approaching the ECB's 2% target, markets are widely betting that the central bank will cut its key deposit rate by 25 basis points at its next meeting in June. In an interview with the Financial Times on Monday, the European Central Bank's chief economist, Philip Lane, said that “barring major surprises, at this stage there is enough of what we are seeing to remove the top level of restrictions.”
Elsewhere, the pound was unchanged against the dollar at $1.2740.
The Japanese yen companies, and the broader Asian currency market is muted
In Asia, the Japanese yen pair fell marginally, with traders bracing for potential further government intervention to support the currency. According to media reports, the government last intervened during the May 1 holiday. The move sparked significant losses in USD/JPY, although it has since recouped the bulk of those losses this month.
Data from Tokyo, along with readings, are also scheduled to be released later this week.
Other Asian currencies were silent. The Australian dollar pair rose, while the Chinese yuan pair rose slightly after a stronger-than-expected midpoint repair. Monday's data showed growth in China in April.
The South Korean won pair fell slightly, while the Singapore dollar pair moved slightly.
The Indian rupee pair was also broadly unchanged after falling sharply from record highs over the past two weeks.
Ambar Warrick contributed to this report.