Investing.com - The dollar was little changed on Monday, hovering close to six year peaks against the yen and 14-month highs against the euro despite the release of disappointing U.S. home sales data as expectations for an early U.S. rate hike continued to support the greenback.
The National Association of Realtors said that U.S. existing home sales declined 1.8% to 5.05 million units last month from 5.14 million in July. Analysts had expected existing home sales to rise 1% to 5.20 million units in August.
USD/JPY edged 0.12% lower to 108.95, but remained within close distance of Friday's six-year peak of 109.45.
The dollar remained supported as signs that the economic recovery is making solid progress fuelled expectations that the Federal Reserve will hike interest rates sooner than markets are expecting.
Last week, the Fed offered fresh guidance on its plans to raise interest rates, outlining in more detail how it will start to raise short term interest rates when the time comes.
In contrast, the Bank of Japan and the European Central Bank look likely to stick to a loose monetary policy stance amid concerns over patchy economic growth.
EUR/USD held steady at 1.2833, close to Friday’s 14-month lows of 1.2827 after European Central Bank President Mario Draghi warned that economic activity in the euro area has slowed and there’s a risk of a further downturn.
In remarks to the economic and monetary affairs committee of the European parliament, Draghi reiterated that the ECB expects inflation to remain at low levels over the coming months before increasing gradually in 2015 and 2016.
Draghi added that the ECB "remains ready to use additional unconventional instruments within our mandate, should it become necessary to further address risks of a too prolonged period of low inflation".
The pound was higher, with GBP/USD rising 0.39% at 1.6348.
The pound rose to two-week highs against the greenback on Friday after voters in Scotland chose to stay in the U.K. by a significant margin in a independence referendum, defying opinion polls which had indicated that the final result would be too close to call.
The pound's rally was short lived however as investors began to turn their attention back towards the Bank of England’s monetary policy stance, with the referendum issue out of the way.
The dollar was almost unchanged against the Swiss franc, with USD/CHF at 0.9406, pnear recent one-year highs of 0.9433.
The New Zealand and Australian dollars were lower, with NZD/USD down 0.09% to 0.8114 and AUD/USD retreating 0.69% to fresh six-month lows at 0.8868. Meanwhile, USD/CAD gained 0.58% to 1.1015.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was steady at 84.88, not far from session highs of 84.95, the strongest level since July 2010.