The dollar falls on Monday after U.S. Federal Reserve Vice Chair for Supervision Michelle Bowman signals support for rate cuts, easing earlier gains driven by geopolitical tensions in the Middle East.
Bowman says the time to reduce interest rates may be approaching, citing concern about risks to the job market and less worry over inflation from tariffs.
The dollar had risen earlier in the day after U.S. airstrikes on Iranian nuclear sites led investors to unwind riskier positions. Iran threatens to retaliate and close the Strait of Hormuz, through which about one-fifth of global oil supply passes.
Last week, the Fed left rates unchanged, with Chair Jerome Powell warning that summer inflation may rise due to tariffs imposed by the Trump administration. Powell is expected to testify before Congress on Tuesday and Wednesday.
The dollar index falls 0.14% to 98.78 after rising to 99.42 earlier, the highest since May 30. The Japanese yen drops 0.45% to 146.77 against the dollar and reaches 148.02, the weakest since May 13, as concerns over higher oil costs weigh on the import-heavy Japanese economy.
Sterling gains 0.17% to $1.3467 after touching $1.3367, its lowest since May 20. Data shows U.K. business activity improves slightly in June, but job cuts continue and concerns about Middle East conflict persist.
The euro rises 0.08% to $1.1528 as the euro zone economy shows no clear growth in June, with weak manufacturing and limited service sector gains.
In cryptocurrency markets, bitcoin climbs 2.35% to $101,903.
