(Adds dates of expected ECB and BOJ decisions, updates prices)
Fed seen pausing rate hike this week
ECB expected to raise rates in June, July
BOJ seen keeping ultra-easy policy stance
The dollar inched higher on Monday, trading in a narrow range as investors remained cautious ahead of several key policy decisions due this week, with the Federal Reserve expected to keep rates on hold for the first time since January 2022.
Monetary policy meetings at the Fed, the European Central Bank (ECB) and the Bank of Japan (BOJ) will set this week's tone as markets seek clues from policymakers on the future path of interest rates.
U.S. May inflation data is also out on Tuesday as the Fed kicks off its two-day meeting. "Though it's more likely than not that the Fed will 'skip' a hike this month, it seems as if no one wants to be caught on the wrong side of the market should they choose to hike this month, keeping volatility low across most majors," said Helen Given, FX trader at Monex USA in Washington.
She said everyone seemed to be "holding their breath" and waiting for cues from Fed Chair Jerome Powell. "A hike Wednesday would likely be very dollar-positive as it would go against current market expectations," Given said.
Money markets are leaning toward a pause from the Fed, according to Refinitiv's FedWatch, but a majority expect a hike in the July meeting.
Conversely, a clear majority of economists polled by Reuters expect the ECB to hike its key rate by 25 basis points on Thursday and again in July, before pausing for the rest of the year as inflation remains sticky.
The U.S. dollar index =USD clocked a loss of nearly 0.5% last week, its worst weekly drop since mid-April, and was last up 0.1% at 103.60.
The euro EUR=EBS was up slightly at $1.0760, having risen 0.4% last week, its first weekly gain in roughly a month.
Elsewhere, the Japanese yen JPY=EB slipped 0.2% to 139.55 per U.S. dollar, before a two-day meeting by the BOJ, which is expected to maintain its ultra-loose monetary policy and forecast a moderate economic recovery, as robust corporate and household spending cushion the blow from slowing overseas demand, sources told Reuters. The BOJ announces its policy decision on Friday.
Elsewhere, the Reserve Bank of New Zealand last month signaled it was done tightening after raising rates to the highest in more than 14 years at 5.5%, ending its most aggressive hiking cycle since 1999. That sent the New Zealand dollar NZD=D3 tumbling 2.7% in May.
The kiwi was last down 0.1% at US$0.6124, sterling GBP=D3 fell 0.6% against the dollar to $1.2510, while the Aussie AUD=D3 edged up to US$0.6750 with a holiday in most of Australia making for thinned trade.
China's offshore yuan CNH=D3 extended losses to trade at its lowest level against the greenback since November as recent soft data has raised expectations for monetary easing from the People's Bank of China this year. The dollar was last up 0.2% at 7.158.
======================================================== Currency bid prices at 4:25PM (2025 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index =USD 103.5900 103.5300 +0.08% 0.097% +103.7500 +103.2400 Euro/Dollar EUR=EBS $1.0760 $1.0750 +0.10% +0.42% +$1.0790 +$1.0734 Dollar/Yen JPY=EBS 139.5600 139.3400 +0.17% +6.45% +139.7550 +139.0800 Euro/Yen EURJPY= 150.17 149.77 +0.27% +7.03% +150.3400 +149.6700 Dollar/Swiss CHF=EBS 0.9087 0.9030 +0.62% -1.74% +0.9108 +0.9016 Sterling/Dollar GBP=D3 $1.2510 $1.2579 -0.55% +3.44% +$1.2599 +$1.2487 Dollar/Canadian CAD=D3 1.3366 1.3341 +0.21% -1.33% +1.3384 +1.3315 Aussie/Dollar AUD=D3 $0.6752 $0.6744 +0.11% -0.95% +$0.6773 +$0.6732 Euro/Swiss EURCHF= 0.9777 0.9707 +0.72% -1.19% +0.9787 +0.9706 Euro/Sterling EURGBP= 0.8599 0.8545 +0.63% -2.77% +0.8606 +0.8541 NZ NZD=D3 $0.6123 $0.6130 -0.11% -3.57% +$0.6152 +$0.6107 Dollar/DollarDollar/Norway NOK=D3 10.7950 10.7630 +0.50% +10.22% +10.8280 +10.7400 Euro/Norway EURNOK= 11.6141 11.5557 +0.51% +10.72% +11.6440 +11.5316 Dollar/Sweden SEK= 10.8166 10.8107 +0.17% +3.93% +10.8541 +10.7421 Euro/Sweden EURSEK= 11.6330 11.6133 +0.17% +4.34% +11.6535 +11.5869 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ USD 120623 v2 https://tmsnrt.rs/43XdAbZ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
