The U.S. dollar weakened to its lowest level in two weeks on Monday, driven by a sharp pullback in market expectations for a Federal Reserve interest rate hike this year.
The greenback's retreat reflects a broader reassessment of the U.S. monetary policy trajectory, with traders scaling back bets on tightening as economic data suggests a more measured approach from policymakers.
Despite the dollar's softening, the Japanese yen remained pinned near a 40-year low against the greenback.
The currency's persistent weakness underscores the enduring impact of the interest rate differential between the U.S. and Japan, as well as ongoing concerns about the Bank of Japan's cautious stance.
Investors remain nervous about potential intervention risks, though the yen has yet to stage a meaningful recovery.
The shift in dollar dynamics comes after a period of broad-based strength, during which the greenback rallied against most major peers.