TOKYO- The dollar edged lower on Monday amid speculation that US Federal Reserve Chairman Jerome Powell will shun talk of tapering bond purchases at a policy meeting this week.
The euro rose to a near two-month high against the greenback before data later on Monday forecast to show an improvement in German business sentiment, which would bolster hopes for a brighter economic outlook.
Powell is likely to face questions over whether an improving labor market and rising coronavirus vaccinations warrant a withdrawal of monetary easing, but most analysts expect him to say such talk is premature, which would put downward pressure on Treasury yields and the dollar.
“The dollar is likely to continue to trend lower in line with the gathering momentum in the world economy,” analysts at Commonwealth Bank of Australia wrote in a research note.
“We expect the Fed policy meeting to be a non-event for the dollar. The US economy is a long way from meeting the ‘substantial further progress’ threshold for the Fed to taper its asset purchases.”
The dollar stood at 107.75 yen, close to its lowest since March 4.
The euro rose to $1.2110, adding to gains made on Friday after positive data on European services and manufacturing activity.
A survey from Germany’s Ifo institute due later on Monday is expected to show business conditions continued to improve in Europe’s largest economy.
The British pound was quoted at $1.3897, adding to a 0.3 percent gain in the previous session.
