By Sam Forgione
NEW YORK (Reuters) - The U.S. dollar hit its lowest level against the yen in more than two weeks on Monday and was lower against a basket of major currencies on continued expectations of a slow path of Federal Reserve rate increases this year.
The dollar, which posted its worst week in roughly two months last week, fell as low as 111.10 yen
The dollar index (DXY), which measures the greenback against a basket of six major currencies, was last down 0.07 percent at 94.551, not far from a 5-1/2-month low of 94.319 touched last week. The euro was last up 0.04 percent against the dollar, at $1.1390, after touching a 5-1/2-month high of $1.1437 on Friday.
"You have a continued flow-through from the Yellen comments," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.
He said traders were unwinding bets that the dollar would appreciate against the yen in response to the Yellen's dovish remarks and on the Bank of Japan's taking a less dovish approach than expected.
The dollar index had briefly erased losses earlier after Boston Fed President Eric Rosengren said it was "surprising" that futures markets currently imply one or zero rate hikes this year. Rosenberg, who is typically dovish, said market predictions could prove "too pessimistic."
Fed funds futures contracts on Monday suggested traders saw just a 40 percent chance of a Fed rate hike in July, according to CME Group's FedWatch program. Although the Fed also has policy meetings scheduled for both later this month and in June, July is the first meeting where the chances of a hike are seen as even significant, according to FedWatch.
The dollar is "going to be mired in a range" given the aftereffects of Yellen's dovish comments from last week, said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.
The dollar was last down 0.32 percent against the yen at 111.31 yen. Against the Swiss franc, the dollar was last up 0.17 percent, at 0.9591 franc, after touching a more than five-month low of 0.9547 franc last week