On Monday, the dollar edged higher against the euro as investors awaited more guidance on the U.S. interest rate path, following cautious remarks from Federal Reserve officials, despite signs that inflation is cooling.
Although last week's data indicated some easing of consumer price pressures in April, Federal Reserve officials remain reluctant to assert that inflation is moving towards the 2% target. On Monday, several officials emphasized the need for continued cautious policy.
Atlanta Fed President Raphael Bostic said the Federal Reserve needs time to confirm that inflation is returning to its target. In an interview with Bloomberg TV, he said, "The question right now is when we can be sure that inflation is clearly on a path back to 2%. I think it will take some time before we can be certain."
Federal Reserve Vice Chair Philip Jefferson said at a mortgage bankers' conference in New York that it is too early to determine whether the recent slowdown in inflation will persist.
The euro fell 0.05% to $1.0863 against the dollar. The dollar rose 0.4% against the yen to 156.26 yen.
Last week's data showed that U.S. consumer prices in April rose less than expected, leading the market to expect a 50-basis-point rate cut from the Federal Reserve later this year.
With no major economic data released on the day, key currency pairs remained in narrow ranges on Monday.
Michael Brown, a market analyst at online broker Pepperstone, said, "Following last week's CPI data release, the forex market currently lacks new momentum."
"Although the Federal Open Market Committee's calendar remains busy, speakers seem to offer limited new information at this stage. With the response mechanism already clear, another rate hike is almost ruled out, and several sets of satisfactory inflation data are needed to establish confidence that inflation is returning to 2%, before considering the first rate cut," Brown added.
This week will see the release of economic survey data for the Eurozone, Germany, the UK, and the U.S.
The euro remains close to the near two-month high of $1.0895 reached last week. The euro has risen 1.8% in May, driven by weak U.S. economic growth and inflation data, and Eurozone economic recovery.
Traders are closely watching for signs of government intervention due to the yen's weakness. After suspected intervention in early May in Tokyo boosted the yen, the currency has fluctuated within a narrow range in recent days.
The pound rose 0.07% to $1.2711, having earlier reached a two-month high of $1.27255. The UK will release its inflation report on Wednesday.
The Australian dollar fell 0.3% to $0.6671. The Australian dollar has risen 3% this month, driven by high inflation in Australia. Pepperstone's Brown said that despite rising commodity prices, the weakness of commodity-related currencies on Monday does not bode well for the Australian dollar's short-term outlook.
Brown noted, "In the context of rising commodity prices and a resilient stock market, the weakness of commodity-related currencies may be a warning sign for Aussie dollar bulls."
In the cryptocurrency market, bitcoin rose 2.7% to $68,715, hitting a five-week high.
