(February 26, 2018) The dollar turned lower against a currency basket on Monday, giving back some of the previous week’s gains, with investors cautious ahead of Federal Reserve Chairman Jerome Powell’s first congressional testimony later in the week.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.21% to 89.62 by 03:38 AM ET (08:38 AM GMT).
The index climbed 0.9% last week, extending its recovery after hitting a three year low of 88.15 on February 16.
The dollar was boosted by the view that the selloff in the currency since the start of the year had been overdone and by expectations for faster hikes in U.S. interest rates.
The dollar eased on Monday as investors turned their attention to Powell’s congressional testimony on monetary policy and the economy, before the House on Tuesday, followed by testimony to the Senate on Thursday.
The dollar was lower against the yen, with USD/JPY sliding 0.21% to 106.56, off an overnight high of 107.18.
The euro pushed higher, with EUR/USD rising 0.13% to 1.2319, but gains were held in check as investors remained cautious ahead of the Italian general election due to be held on March 4.
European Central Bank head Mario Draghi was due to testify on monetary policy and the inflation outlook before the European Parliament later in the day.
Sterling also gained ground against the softer dollar, with GBP/USD climbing 0.51% to 1.4046.
The pound remained supported after the Bank of England’s deputy governor said over the weekend that interest rates might need to rise sooner than expected if wages grow as fast the central bank expects in the early part of 2018.