The U.S. dollar traded slightly lower on Monday ahead of a week of speeches by Federal Reserve officials.
The dollar index, measuring the greenback against six rivals, fell 0.29 percent to 106.23. Later, the index eased 0.038 percent to 106.20.
The yen hovered near the key 150 level. It last traded at 149.5 per dollar after slipping to its weakest value in a year at 150.17 on October 3. Traders remained on guard for signs of a possible intervention by Japanese authorities.
According to Japan's top financial representative, Masato Kanda, the yen continues to be regarded as a safe-haven asset, along with the dollar and the Swiss franc.
Meanwhile, the euro strengthened by 0.40 percent to $1.0554. On October 3, it fell to $1.0448, the lowest since December 2022. Sterling was last at $1.2214, down 0.02 percent on the day.
The Australian dollar rose 0.27 percent to $0.636, while the New Zealand dollar fell 0.3 percent to $0.591.
Australia's central bank had reportedly considered raising interest rates at its recent policy meeting but decided not to due to a lack of new economic data. Meanwhile, investors are reducing expectations that the New Zealand central bank will raise interest rates further in November, as consumer inflation hit a two-year low in Q2.
Investors 'keep an eye' on upcoming speeches
Investors will pay close attention to Fed Chairman Jerome Powell's speech on Thursday during a busy week of speeches from various regional Fed heads. After that, the Fed will enter a blackout period on October 21, ahead of the FOMC meeting at the end of the month.
Traders assess whether the Fed will continue rising interest rates to bring inflation back to its two percent target.
"The market is going to be focused on do we get a reacceleration in the economy early next year and does that feed into inflationary pressures," said Edward Moya, senior market analyst at OANDA.
Chicago Fed President Austan Goolsbee said the slowdown in U.S. inflation is a trend, not just a temporary blip, despite recent economic data showing ongoing price pressure in some areas.
Philadelphia Fed President Patrick Harker expressed concern about the current level of interest rates on Monday, saying that the current rates have made it very difficult for first-time homebuyers to enter the housing market. He argued that the central bank should avoid creating new economic pressures by raising the cost of borrowing further.
According to the CME Group's FedWatch Tool, Fed funds futures indicate a 33 percent probability of at least one more interest rate hike this year.
Middle East conflict affects market
The conflict in the Middle East continues to concern investors. According to JP Morgan, the conflict will not heavily impact oil production or supply and the broader market if it remains contained. However, if the conflict escalates and reaches a broader region, it can heavily impact the global market.
"Geopolitics will continue to be a key driver for markets in the week ahead as investors continue to weigh the risks of an escalation with the approach of the U.S. authorities to prevent the conflict spreading to rest of the Middle East region," Charu Chanana, market strategist at Saxo in Singapore, told Reuters.