The U.S. dollar edged lower in early European trade, retracing some of its recent gains amid thin trading volumes due to the Presidents’ Day holiday in the U.S. The Dollar Index, which measures the greenback against a basket of six major currencies, traded 0.1% lower at 104.067, near three-month highs.
Last week, the U.S. dollar recorded its fifth consecutive positive week, boosted by higher-than-expected increases in U.S. producer and consumer prices for January. These data raised expectations that the Federal Reserve might delay the start of its interest rate-cutting cycle from March to the beginning of summer.
This week, traders are focused on the release of the Fed’s meeting minutes from last month scheduled for Wednesday. Additionally, speeches from several Fed officials, including Christopher Waller and Raphael Bostic, are expected to provide further insights into the central bank’s stance.
In Europe, the euro traded 0.1% higher against the dollar at 1.0783 as traders awaited the European Central Bank’s survey of negotiated wage rates and the flash PMIs for February.
GBP/USD rose 0.2% to 1.2622, benefiting from slight dollar weakness and positive data showing UK retail sales growing at their fastest pace in nearly three years in January.
In Asia, USD/JPY fell 0.2% to 149.94, hovering around the psychologically significant 150 level. Traders remained cautious of potential government intervention in currency markets.
USD/CNY edged 0.1% higher to 7.1986, staying close to a three-month low, with further losses limited by a strong daily midpoint fix from the People’s Bank of China. The central bank is expected to keep its benchmark loan prime rate unchanged, maintaining record-low rates.