The U.S. dollar gained in early European hours Monday, recovering some of Friday's sharp losses after the weak payrolls release, while disappointing Chinese inflation data weighed on the yuan.

At 03:10 ET (07:10 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher to 102.020, after falling around 1% on Friday.

The dollar slumped on Friday after the release of the monthly employment report which showed U.S. job gains were the smallest in two-and-a-half years, raising doubts about how much higher the Federal Reserve will need to take interest rates to slow the economy enough to impact inflation.

Nonfarm payrolls increased 209,000 in June, missing market expectations for the first time in 15 months.

However, the dollar has rebounded somewhat Monday, as traders reassessed the data, noting that the employment report still recorded strong wage growth, a big factor driving inflation.

Attention will now turn to Wednesday's consumer price index release for June, which is expected to show that the index rising at the slowest annual increase since March 2021.

Elsewhere, EUR/USD fell 0.1% to 1.0962, GBP/USD dropped 0.1% to 1.2820, after having surged to a more than one-year peak of 1.2850 on Friday, USD/JPY rose 0.3% to 142.47, having fallen nearly 1.3% late last week, while AUD/USD, often seen as a proxy for the Chinese currency, dropped 0.5% to 0.6655.

Source: Investing.com