Dollar Dives as Inflation Data Looms: Markets Expectations Shift

The US dollar has been hovering near its two-month low against major currencies as investors await this week's inflation data for clues on the Federal Reserve's rate path. The euro is edging higher, reaching $1.1558, while sterling remains steady at $1.3490.

Treasury yields have slipped, and markets are paring odds for Fed hikes after a recent jobs report showed the US economy unexpectedly shed jobs in July. Job gains for the prior two months were revised sharply lower, cooling expectations for a September rate hike.

U.S. Treasury yields fell to 4.637% on benchmark U.S. 10-year notes, with futures market odds of a September Fed move scaled back to around 44%, from 67% a week ago. Analysts say perceptions around US inflation data will be the biggest factor for currencies this week.