The US Dollar was reported to have weakened against six major currencies on Monday as risk appetite returned to currency markets and investors weighed the possible impact of a US rate hike expected this week.
The currency market was seen to be turbulent at the start as investors were cautious due to concerns over global growth prospects. But the US dollar started to fall when in the middle of the European market.
U.S. Federal Reserve has signaled a 75 basis point rate hike at its July 26-27 meeting, although last week's data showing inflation hit 9.1% year-on-year in June raises the possibility of a bigger 100 basis point hike later this year.
Meanwhile, investors pay attention to the company's earnings.
The US dollar index, which measures the US dollar against the six major currencies traded, fell 0.25% to a trading level of 106.36. The Euro was up 0.09% to $1.0219.
Neil Jones, head of FX at Mizuho, said the boost to the euro may be due to traders taking short-term profits. The European Central Bank last week raised rates for the first time since 2011.
The euro was boosted to a two-week high last week following a rate hike, but it later fell after disappointing data as business activity data from France and Germany were weak.
FX analysts ING said the euro's move suggested that expectations about the European Central Bank's policy plan would be driven more by market data going forward, with euro zone inflation data due on Thursday and Friday.
High energy prices and gas shortages have left Germany on the brink of recession, according to the Ifo institute. Where German business sentiment fell more than expected in July.
A survey on Sunday showed that 16% of industrial companies in Germany have cut production in response to rising energy prices.
US economic growth is slowing and inflation is "too high", US Treasury Secretary Janet Yellen said on Sunday.
"Recession concerns continue to hold back the recovery in risk sentiment, which incidentally should provide some additional support to safe havens," said ING FX analysts.
The Australian dollar was up 0.3% at $0.6948 while the New Zealand dollar was up 0.2% at $0.6267. The British pound was up 0.2% against the dollar at $1.2035, while the euro-sterling was steady at 84.955 pence per euro
British Foreign Secretary Liz Truss and former finance minister Rishi Sunak set the stage over the weekend in their campaign to become Britain's next prime minister.
