The dollar stalled on Monday as investors focused on U.S. inflation data later this week, while the yen fell around 34-year lows as traders watched for Tokyo action to support the falling currency.
The dollar fluctuated this week as traders digested a mixed bag of U.S. economic data, including a slowdown in services growth and unexpectedly strong hiring numbers that reduced betting on Federal Reserve rate cuts this year.
The dollar index, which tracks the greenback against six major peers, was steady on Monday at 104.38, but U.S. Treasury yields rose, reflecting interest rate expectations.
On Wednesday, U.S. consumer price inflation for March will test dollar strength, while the ECB policy meeting on Thursday is another major economic indicator for key global currencies.
"Another upside inflation surprise could trigger a bigger hawkish reassessment of Fed rate-cut expectations and open the door for the U.S. dollar to break higher," the note said.
The dollar rose 0.16% against the yen to 151.88, near its July 1990 peak. On Friday, Japanese Prime Minister Fumio Kishida said Tokyo will employ "all available means" to stabilize the yen.
In his Monday speech to parliament, Bank of Japan Governor Kazuo Ueda stated he had simplified monetary policy but gave little away.
"Due to Japanese intervention risk, dollar-yen upside is limited and daily range is very low," said Nomura currency strategist Jin Moteki. The euro fell 0.1% to $1.08305, while pound fell 0.1% to $1.26255. The ECB may keep rates this week and consider a June drop. The ECB is sure inflation will return to its 2% target, but it has not announced more easing.
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