The dollar held close to a three-week low against a basket of major currencies on Monday ahead of this week's Federal Reserve meeting, as investors bet interest rates would be kept at their record lows until at least December. The greenback has retreated from 12-year highs set in March, as rate hike expectations have been pushed back on uneven domestic data and turbulent market conditions due to worries about China, the world's No 2 economy.
Though some in the market still think the Fed could act this week, the view that faltering global growth could push a move to the end of the year - or even into 2016 - is gathering steam. "Of course China is important, but the Fed has to worry about the US economy," said Ron Simpson, director of currency research at Action Economics in Tampa, Florida.
Ahead of the start of the Fed's two-day meeting on Wednesday, the dollar edged up 0.1 percent at 95.304 after hitting a low of 94.913, its weakest since August 26. The dollar was 0.4 percent lower against the yen at 120.06 yen, while the euro fell 0.3 percent against the greenback at $1.1303.