The dollar was slightly below a three-week high against a basket of major currencies on Monday as traders cautiously awaited clarity on the next round of tariffs from U.S. President Donald Trump.
The euro rose slightly after three straight sessions of declines, while the yen weakened against the dollar, pressured by a rise in U.S. Treasury yields.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, was flat at 104.15 by 0525 GMT, after touching 104.22 on Friday for the first time since March 7. The index rose 0.4% last week, its first week of gains this month.
The dollar has been under pressure for much of this year as market assumptions that Trump would soon enact pro-growth policies gave way to concerns that the president's aggressive and erratic trade policies could trigger a recession. The next round of tariffs is due on April 2, when the White House is expected to announce reciprocal tariffs on a slew of countries.
"We lowered our dollar forecasts last week but still expect the dollar to strengthen from current levels," Goldman Sachs analysts wrote in a research note.
"The market has quickly re-priced the change in the growth outlook, and outperformed the forecast changes our team had made for 2025," they said.
Additionally, "our economists lowered U.S. growth as we now expect tariffs to rise more substantially, which we think will still be dollar-positive."
The dollar rose 0.35% to 149.83 yen. The pair tends to track changes in bond yields, and the 10-year Treasury yield rose as much as 2.5 basis points to 4.2790% on Monday. The euro rose 0.1% to $1.0819, up from a nearly three-week low of $1.0795 on Friday.
The common currency had risen to its highest since early October at $1.0955 last week on optimism over Germany's move to ease fiscal constraints to boost military and infrastructure spending.
But the currency has slumped in recent days ahead of the changes, with Germany's upper house of parliament passing a bill on the so-called debt brake on Friday.
"With the bill now in place, we expect the euro to give back more of its recent gains as it becomes clear that it will take a long time to significantly increase spending," Commonwealth Bank of Australia analysts wrote in a client note.
"The real sticking point, however, is next week's announcement by President Trump of a new tariff regime."
Sterling was flat at $1.2914, as was the Australian dollar at $0.6277.
Cryptocurrency bitcoin rose about 2% to $87.006.
The Turkish lira was steady at around 38.0050 per dollar, even as a Turkish court on Sunday jailed Istanbul Mayor Ekrem Imamoglu, a key political rival of President Tayyip Erdogan, on corruption charges, which Imamoglu denies.
The arrests came after the main opposition party, European leaders and hundreds of thousands of protesters criticized the action against him as politicized and undemocratic.
The lira plunged to a record low of 42 per dollar last week, when Turkey's central bank said it was suspending one-week repo auctions and raising its overnight lending rate to 46%, a move economists said was a tighter policy stance. (Newsmaker23)
Source: Reuters
