The US dollar began the new trading week strengthening against most of the world's currencies as traders assessed last week's US jobs data.
A tight US labor market and limited progress on inflation have reinforced calls from Federal Reserve officials, including Chairman Jerome Powell, not to rush into a decision on when to cut interest rates, Reuters reported.
FedWatch CME data showed that after the report was released, markets priced in a 50% probability of a Fed rate cut in June, down from about 66% on April 4.
Meanwhile, this week's market focus will be on US consumer price inflation data for March and the outcome of the European Central Bank's (ECB) monetary policy meeting.
Analysts at the Commonwealth Bank of Australia believe that if the US CPI for March remains stable, the dollar will continue to rise.
The USD/JPY was up 0.06% at 151.72 despite warnings from Japanese authorities that they may intervene to stabilize the yen. According to yen futures data from the CFTC, non-commercial short positions reached their highest level since December 2023 on April 2, totaling 143,230 contracts.
"The upside potential for the dollar-yen exchange rate is limited, and the daily range is very narrow due to the risk of intervention by the Japanese authorities," said Jin Moteki of Nomura.
Moteki pointed out that low volatility and widening dollar-yen yield spreads have contributed to an increase in carry trades, leading to a rise in short-yen positions.
The EUR/USD and GBP/USD fell 0.03% and 0.07% to 1.0832 and 1.2628, respectively.
Traders are now expecting the ECB to leave interest rates unchanged, but to signal a rate cut in July at its April 11 meeting.
Meanwhile, the AUD/USD and NZD/USD rose 0.12% and 0.05% to 0.6586 and 0.6015, respectively.
The USD/CNY pair remains steady at 7.2334 as traders remain uncertain after Chinese markets opened earlier due to a holiday.
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