(Updates prices, market activity and comments to U.S. market open, new byline, changes dateline, previous LONDON)
The dollar fell to one-week lows on Monday as investors questioned whether a rally that last week sent the greenback to more than four-month highs had run out of steam.
The dollar has gained as a rise in U.S. Treasury yields highlighted the wide interest rate gap between the United States and other countries.
But the surge was stymied by soft April U.S. consumer price data published last week that introduced doubts about expectations that the Federal Reserve would raise rates as many as four times in 2018.
“The momentum behind the dollar move is starting to stall a little bit,” said Mark McCormick, North American head of FX strategy at TD Securities in Toronto. “Where we are right now is markets are trying to figure out whether or not they want to take the dollar higher.”
The index .DXY fell 0.29 percent on Monday to 92.270. It has fallen from 93.416 last Wednesday, the highest since Dec. 22.
Growing worries about the U.S. budget deficit, which is projected to balloon to more than $1 trillion in 2019 due to a government spending splurge and large corporate tax cuts, have also undermined the dollar, along with concerns about the country's current account deficit.
"Barring a significant, and unlikely, pickup in productivity, a persistent USD rally is unlikely as the twin deficits crowd out private investment by raising borrowing costs," Hans Redeker, global head of currency strategy at Morgan Stanley in London, wrote in a note.
The euro strengthened even as investors kept a wary eye on political events in Italy.
Italy's anti-establishment 5-Star Movement and the far-right League, both hostile to European Union budget rules, spent the weekend in talks to forge a common policy program. The parties were adversaries as recently as March but now appear likely to form Italy's next government.
The euro EUR= gained 0.41 percent to $1.1991, having fallen last week to $1.1823, its weakest since Dec. 22.
Investors are focused this week on speeches by Fed and European Central Bank officials, as well as German data on Tuesday that is expected to show some slowdown in economic growth.
======================================================== Currency bid prices at 9:33AM (1333 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1991 $1.1942 +0.41% -0.04% +1.1996 +1.1940 Dollar/Yen JPY= 109.5100 109.3800 +0.12% -2.80% +109.5900 +109.2200 Euro/Yen EURJPY= 131.34 130.59 +0.57% -2.84% +131.3700 +130.5100 Dollar/Swiss CHF= 0.9960 1.0004 -0.44% +2.23% +1.0008 +0.9958 Sterling/Dollar GBP= 1.3593 1.3541 +0.38% +0.60% +1.3602 +1.3540 Dollar/Canadian CAD= 1.2756 1.2791 -0.27% +1.42% +1.2794 +1.2752 Australian/Doll AUD= 0.7557 0.7542 +0.20% -3.13% +0.7565 +0.7542 arEuro/Swiss EURCHF= 1.1947 1.1944 +0.03% +2.21% +1.1980 +1.1944 Euro/Sterling EURGBP= 0.8820 0.8817 +0.03% -0.71% +0.8827 +0.8811 NZ Dollar/Dolar NZD= 0.6946 0.6966 -0.29% -1.98% +0.6974 +0.6938 Dollar/Norway NOK= 7.9836 8.0004 -0.21% -2.72% +8.0012 +7.9651 Euro/Norway EURNOK= 9.5761 9.5525 +0.25% -2.77% +9.5830 +9.5340 Dollar/Sweden SEK= 8.5907 8.5937 +0.34% +4.75% +8.6034 +8.5709 Euro/Sweden EURSEK= 10.3023 10.2670 +0.34% +4.71% +10.3088 +10.2594
