markets subdued the start of what could turn into a busy week, with all eyes on U.S. inflation data for clues on when the Federal Reserve may start to cut rates.
The euro was down 0.14% $1.0769, edging off a 10-day high touched in early trading after the past week saw a small bounce back following steady declines in 2024. A reading of the euro zone's economic growth in the fourth quarter on Wednesday could offer fresh direction.
The pound dropped 0.1% to $1.2632, though the Japanese yen strengthened a touch to 149.01 per dollar as the approaching release of U.S. CPI data for January on Tuesday capped moves.
Changing expectations of when and how quickly central banks will cut interest rates as inflation falls are a significant driver of currency markets at present.
Strong jobs data this month has largely taken a March Federal Reserve rate cut off the table, with markets currently seeing a move in May as more likely than not.
The U.S. data also caused market pricing for the first European Central Bank rate cuts to be pushed back, even though European economic data has been much less strong.
That lack of divergence between both the Fed and ECB and the Fed and other central banks has prevented the dollar moving significantly higher, said Simon Harvey, head of FX analysis for Monex Europe, and left the currency largely range bound, until the situation changes.
«In the interim we keep floating around, and US CPI will determine how the dollar trades within those ranges,» he said.
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Analysts expect U.S.