The US dollar's gains against the Euro and Pound were again limited today as market players focused on US inflation data expected on Wednesday for signs of how close US rates are to a peak.
The euro was up 0.52% at $1.0918 and the pound rose a similar amount to $1.2439 as most European markets returned from the Easter week. Both currencies over the holiday period have eased from early April peaks after a resilient US labor market release on Friday strengthened the case for a Federal Reserve rate hike next month, and also eased concerns about a more significant US economic slowdown.
According to Jane Foley, chief FX strategist at Rabobank, the euro's ability to surge further from $1.09 will depend on upcoming data and US interest rates.
Tuesday's moves were also influenced by the re-opening of European markets after the break, said Simon Harvey, head of FX analysis at Monex Europe, as liquidity was limited on Friday and Monday with most European markets closed.
Analysts expect that traders may have sold euros for dollars when U.S. Treasury yields. rose after jobs data while European bond markets closed. European bond yields rose sharply on Tuesday, after the holidays.
The US dollar also slipped against the Japanese yen, falling 0.4% to 133.03, after surging 1.1% on Monday boosted by remarks from new Bank of Japan Governor Kazuo Ueda.
Traders now see about a two-thirds chance the Fed will raise rates another quarter point on May 3, according to CME's Fedwatch tool.
The US dollar index is currently trading down 0.42% against six major currencies to trade at 101.815.
