Investing.com - The euro slipped lower against the dollar on Monday, easing back from Friday’s highs as investors continued to digest an unexpectedly dovish Federal Reserve statement and as concerns over Greece’s future in the euro zone lingered.
EUR/USD slid 0.14% to 1.0805, off Friday’s highs of 1.0881.
The dollar weakened sharply on Friday, at the end of a volatile week’s trading amid uncertainty over the path of U.S. monetary policy after the Fed downgraded its forecasts for growth and inflation and lowered its interest rate projections.
The Fed statement dampened expectations for a mid-year rate hike, prompting investors to exit positions which would benefit from a strong dollar.
Despite last week’s reversal the dollar looks likely to continue to strengthen, with the Fed still expected to raise interest rates ahead of other central banks.
The euro has fallen around 10% against the dollar so far this year and the European Central Bank’s trillion-euro quantitative easing program, which launched earlier this month, is set to continue to act as a drag on the single currency.
Later Monday ECB President Mario Draghi was to appear before a European Parliament committee, with the situation in Greece likely to be high on the agenda.
Investors were also looking ahead to Tuesday’s U.S. inflation report after Fed Chair Janet Yellen warned last week that the stronger dollar was pushing down inflation.
Elsewhere, USD/JPY was at 119.97 after falling from highs of 121.19 on Friday.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.2% to 98.24. The index ended last week down 2.53%, the biggest weekly loss since October 2011.