The US dollar fell against a basket of major currencies on Monday on the view that the Federal Reserve would not be able to hike interest rates as quickly as forecast this year given weak US economic data and continued easing from the Bank of Japan. The dollar dipped against the yen, hitting a session low of 120.670 yen after shooting 2 percent higher against the Japanese currency on Friday to a six-week high of 121.700 after the BoJ's surprise shift to negative interest rates.
The euro rose against the dollar to a session high of $1.09130 from Friday's low of $1.08100. Analysts said that the yen partly recovered against the dollar since the reaction from the BoJ's move had ended, while the euro and yen also gained on expectations for a more dovish path of Fed rate hikes.
"The market has come to the realisation that the Fed will not be as aggressive in 2016 as it indicated at the end of last year, and that in itself is making people question their long dollar positions," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.
Analysts said that the BoJ's move on Friday was another event that could forestall the Fed from hiking rates as quickly as they initially forecast. Policymakers at the US central bank indicated in December that they expected to hike rates four times this year.
The US dollar index, which measures the greenback against a basket of six major currencies, was last down 0.5 percent at 99.104. The dollar was last down 0.62 percent against the Swiss franc at 1.01700 francs. The euro was last up 0.63 percent against the dollar at $1.08990, while the dollar was last down 0.17 percent against the yen at 120.940 yen.
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