Investing.com - The dollar was steady against a basket of the other major currencies on Monday, remaining supported above last week’s three year lows after a modest bounce higher on Friday.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was unchanged for the day at 89.03 by 03:21 AM ET (08:21 AM GMT).
The index ended up 0.63% on Friday, having earlier sunk to a low of 88.15; the weakest since December 2014. The index fell 1.46% last week, marking its fifth weekly decline in the past seven weeks.
Expectations for a faster rate of monetary tightening outside the U.S., which would lessen the divergence between the Federal Reserve and other central banks has eroded the dollar’s relative yield attraction for investors.
The greenback has also been hit by concerns that large corporate tax cuts and increased government spending will negatively impact the U.S. fiscal deficit, which is projected to balloon to near $1 trillion in 2019.
The declines in the dollar came despite expectations for a faster pace of rate hikes by the Fed this year after data last week showing a stronger-than-expected increase in U.S. inflation in January.
The dollar moved higher against the yen, with USD/JPY rising 0.32% to 106.53, up from Friday’s 15-month lows of 105.55
The Japanese currency has gained around 6% against the dollar so far this year.
The steep drop in the dollar against the yen in recent sessions has fueled speculation over an intervention by Japanese officials.
Japan’s top government spokesman Yoshihide Suga said on Friday that recent moves in the currency market were one-sided and that the government would take appropriate measures if needed.
The euro was little changed, with EUR/USD at 1.2412. The single currency hit its highest level since 2014 at 1.2555 on Friday, before ending the day down 0.79%.
The pound was a touch lower, with GBP/USD slipping 0.09% to 1.4014.