Risk currencies hovered above their recent lows against the dollar and the yen on Monday, as fears about slowdown in the global economic recovery appeared to have subsided for now.
The outlook for U.S. inflation and the speed of the Federal Reserve’s future policy tightening are back in focus ahead of Tuesday’s consumer price data and Fed Chair Jerome Powell’s testimony from Wednesday.
“If we see strong data, the Fed could bring forward their projection for their first rate hike further from their current forecast of 2023. That would also mean they have to finish tapering earlier,” said Shinichiro Kadota, senior FX strategist at Barclays.
The euro traded at $1.1868 , edging back from its three-month low of $1.17815 set on Wednesday while against the yen the common currency stood at 130.73 yen , off Thursday’s 2-1/2-month low of 129.63 yen. Sterling held at $1.3887 while the Australian dollar has bounced back from Friday’s seven-month low of $0.7410, even if it traded a little soft through the Asia session at $0.7472 .