Dollar declines on lower U.S. yields, inflation data in focus

The dollar hovered near 2 ½-week lows against major currencies on Monday as a drop in Treasury yields restrained the greenback. 

Both the dollar and bond yields took a breather after rallying to multi-month peaks last month, supported by bets that a fast U.S. pandemic recovery will boost inflation faster than Fed policymakers expect.

The dollar index was little changed at 92.193 in Asian trade after a 0.9% drop last week. It fell below the 92-level on Thursday, its weakest since March 23. 

The 10-year U.S. Treasury yield traded at 1.6745% after falling to as low as 1.6170% last week. It rose to a more than one-year high of 1.7760% on March 30. 

Data on U.S. producer prices on Friday showed its biggest annual gain in 9 ½ years, backing expectations for higher inflation as the economy opens amid an improved public health environment and massive stimulus. 

Against the euro, the dollar hovered near $1.1901, its lowest since March 23. It bought 109.66 against the yen, near a two-week low of 109 hit on Thursday.