In European trading on Monday, the U.S. dollar showed a slight decline, relinquishing some of its gains from the previous week as investors await the Federal Reserve’s upcoming policy-setting meeting.

At 06:00 ET (10:00 GMT), the Dollar Index, which measures the dollar against other major currencies, was down by 0.1% at 103.035. Despite this dip, it had recorded a 0.5% gain last week, marking its first weekly increase in four.

Ahead of Fed meeting, dollar sees marginal slip The U.S. dollar kicked off the new week on a slightly negative note, although it remained near two-week highs. Strong U.S. inflation data from the previous week had heightened expectations for hawkish signals from the Fed, especially with the central bank’s two-day policy-setting meeting set to conclude on Wednesday.

Market projections currently indicate a reduced expectation of rate cuts for the year, with around 75 basis points anticipated, down from 140 basis points at the year’s outset. There’s approximately a 60% probability of the first rate cut occurring by June.

Investors will closely monitor any changes in the Fed’s projections for rate cuts during Wednesday’s meeting.

Euro sees slight uptick The euro edged up by 0.1% against the dollar, reaching 1.0899, following confirmation that eurozone consumer prices were nearing the European Central Bank’s 2% target in February.

Eurozone CPI for February stood at 2.6% annually, slightly lower than the previous month’s 2.8%. The core annual figure dropped to 3.1% from 3.3% in January.

Several ECB speakers are scheduled this week, including President Christine Lagarde, with recent statements suggesting a potential rate cut in June.

Pound slips as BOE maintains status quo GBP/USD traded 0.1% lower at 1.2738, with the Bank of England expected to maintain its current interest rates during Thursday’s meeting.

Following a shift away from a hawkish stance in February, analysts anticipate the bank to refrain from further dovish moves unless there’s a significant downward surprise in CPI data on Wednesday.

Volatility persists ahead of BOJ meeting In Asia, USD/JPY traded 0.1% higher at 149.22 amidst volatile trading preceding the Bank of Japan’s meeting.

Speculation surrounds the BOJ’s decision, with expectations divided on whether the central bank will raise rates in March or April, leaning slightly towards an April adjustment.

USD/CNY saw a 0.1% increase to 7.1982 following mixed economic data from China, with industrial production exceeding expectations while retail sales fell short and unemployment rose unexpectedly.

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