Dollar fell in European trade against a basket of major rivals off three-week highs on profit-taking.
The dollar is on track for the second monthly loss in a row on prospects of the Fed ending the current cycle of policy tightening as inflation approaches targets.
The Index
The dollar index fell 0.15% to 101.58, with a session-high at 101.85, after closing up 0.1% on Friday, the second loss in a row, hitting a three-month high at 102.04.
Monthly Trading
Across July, the index is down 1.3% so far this month on track for the second monthly loss in a row.
The Fed
The Federal Reserve raised interest rates by 25 basis points last week to 5.5%, the highest since 2001, resuming the path of policy tightening.
The Fed paused interest rate hikes at the June meeting for the first time in 15 months in order to monitor developments.
Fed Chair Jerome Powell said the bank is waiting to see the impact of recent interest rate hikes in the data before the next September meeting.
US Inflation
Recent US inflation data showed inflationary pressures declined on Fed policymakers as consumer prices approach the 2% targets.