The U.S. dollar remained near a two-week low on Monday as investors scaled back expectations for further Federal Reserve interest rate increases following signs of slowing economic activity in the United States.
The U.S. Dollar Index, which tracks the greenback against a basket of six major currencies, was little changed at 100.9 points during trading.
The euro traded at $1.1435, while the British pound stood at $1.3351, benefiting from weaker demand for the U.S. currency.
Market sentiment shifted after recent economic data showed a sharp slowdown in U.S. job growth during June, reducing expectations that the Federal Reserve will need to tighten monetary policy further this year.
Investors are now looking ahead to the release of the Federal Reserve’s meeting minutes for additional clues about policymakers’ outlook on inflation, economic growth, and the future path of interest rates.
A softer interest rate outlook generally weighs on the dollar, as lower rates can reduce the appeal of U.S. assets compared with those in other markets.
Meanwhile, the Japanese yen remained under pressure, trading at 161.57 yen per dollar. The currency stayed close to its weakest level since 1986 despite growing speculation that Japanese authorities could intervene to support the yen.
Financial markets continue to monitor developments closely, although many analysts believe that any government intervention would have only a limited effect unless accompanied by broader changes in monetary policy or economic conditions.
The yen has been pressured by the wide gap between interest rates in Japan and those in the United States, a factor that has encouraged investors to favor higher-yielding dollar-denominated assets.
Currency traders are expected to remain focused on upcoming U.S. economic data and Federal Reserve signals, which could play a major role in determining the direction of global foreign exchange markets in the weeks ahead.
