Foreign-exchange markets started the week waiting to see how much and how fast policymakers might ease policy, beginning with the European Central Bank on Thursday.
The euro weakened to $1.12 in Asian trading as the dollar gained on safe-haven demand amid rising tensions in the Middle East.
Positioning data published last week showed that investors remain net long of dollars, unchanged from the previous week.
Foreign exchange has been stuck in trading ranges in recent weeks, with expectations for easing by both the Federal Reserve and the ECB more or less cancelling out the impact on the euro and the dollar.
Pricing for a 50-basis-point Fed cut soared last week after a dovish speech by New York Fed President John Williams. Those expectations later dwindled after a Fed spokesman clarified that the remarks did not refer to “potential policy actions”.
Priced-in forecasts for a 50-basis-point cut have dropped from as high as 71% last week to 18.5% on Monday.
The Fed holds its monetary policy meeting next week, as does the Bank of Japan.
The euro nudged lower to $1.1217 after earlier reaching $1.1208 in Asian trading. The dollar index rose 0.1% to 97.199.
Source : Reuters