Investing.com - The dollar extended losses against a basket of the other major currencies on Monday falling to the day’s lows, helping the euro recover from recent multi-month lows.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.28% at 92.18 by 07:41 AM ET (11:41 AM GMT).
The index hit four-and-a-half month highs of 93.26 on Wednesday before retreating after tame U.S. inflation data tempered expectations for a faster pace of rate hikes by the Federal Reserve this year.
The Fed raised rates in March and projected two more rate hikes this year, although many investors had seen three hikes as possible.
Earlier Monday, Cleveland Fed head Loretta Mester reiterated her support for gradual rate hikes given that inflation has not yet reached the U.S. central bank's 2% target in a sustained way.
The euro moved higher, with EUR/USD rising 0.39% to 1.1988, having recovered from last week’s lows of 1.1821, a level not seen since late December.
Investors were keeping an eye on political developments in Italy amid concerns over the growing possibility of a populist government which raises the prospect of fresh clashes with the European Union over deficit targets.
The dollar was almost unchanged against the yen, with USD/JPY last at 109.47.
The pound gained ground, with GBP/USD climbing 0.39% to 1.3595.
Sterling hit four month lows against the dollar on Thursday after the Bank of England left interest rates on hold as expected, but its cut growth and inflation forecasts for this year and next.
Elsewhere, the Australian dollar was higher, with AUD/USD up 0.17% to 0.7554, extending its recovery from the eleven month lows of 0.7411 reached last week.
The New Zealand dollar remained on the back foot, with NZD/USD down 0.24% to 0.6950, holding above the five month low of 0.6901 reached on Thursday after the country’s central bank left rates on hold overnight and said the next move in rates could just as easily be a cut as a hike.