The US dollar remained flat as markets headed into the European session, overshadowed by Governor Christopher Waller's remarks on interest rates and recent US inflation data.
He who is also a Federal Reserve (Fed) policy maker, warned investors not to get too much hope that it will change its policy approach based on just one inflation figure.
Waller added, the Fed needs to see some more declines in inflation for the central bank to take a step back from monetary tightening.
The USD king, which initially rallied slightly following the statement, traded flat around 2-and-a-half-month lows in the European session following two positive news from China.
Market sentiment improved following the easing of control measures announced by Chinese authorities last Friday along with a new stimulus plan to support the real estate market.
As a result, the risk-sensitive currencies of the Aussie and New Zealand dollars continued to strengthen at two-month highs, shrugging off Governor Waller's remarks.
Even so, the market remains cautious as the daily number of coronavirus cases in China continues to rise with the figure reaching 15,000 on Monday which is feared to disrupt the plan.
In the meantime, also showing an encouraging performance were the euro and the pound which remained traded higher despite slipping slightly at the beginning of the Asian session.
The yen also remained strong at a two-month high, which Bank of Japan (BOJ) Governor Haruhiko Kuroda attributed the gains to in part to government intervention rather than USD weakness alone.
