The dollar edged up from a three-month low on Thursday but was still set to post its steepest monthly decline in a year as investors ramped up bets that the Federal Reserve was done with rate hikes ahead of a crucial inflation report later in the day.

The euro dropped after lower-than-forecast French consumer prices data, a day after data showed price growth in Germany and Spain also slowed, suggesting downside risks to the euro area figure released later in the day.

The dollar index, which measures the U.S. currency against six rivals, rose 0.35% to 103.18, gaining from 102.46 reached on Wednesday which was its lowest level since Aug. 11.

The index is still down around 3.3% in November on growing expectations the Fed will cut interest rates in the first half of 2024.

The euro, the largest weight in the dollar index, was down 0.43% against the dollar to $1.0921. On Wednesday it hit its highest level since August at $1.1017.

Meanwhile, expectations that the Bank of Japan will soon end its negative rate policy have pulled the yen up from the depths, and in the process, eased pressure on the central bank to support the currency via direct FX market intervention.

On Thursday, the yen strengthened 0.07% to 147.085 per dollar, remaining close to the two-and-a-half-month high of 146.675 per dollar it touched on Wednesday. The Asian currency has firmed 3% against the dollar in November and is on course for its strongest month this year.

Bank of Japan board member Toyoaki Nakamura said on Thursday the central bank will likely need some more time before phasing out its massive stimulus.

Sterling was last at $1.2664, down 0.25% on the day, while the Australian dollar rose 0.08% to $0.6622 and is up 4.5% in November - its steepest one-month gain in a year.

Source: Reuters