The differing messages of the world's major central banks on inflation and monetary policy prodded the dollar and euro higher against the yen on Monday, with traders eyeing a series of appearances by US Federal Reserve officials this week.
Fed chief Janet Yellen's confidence as her team raised interest rates for the third time in six months last week surprised investors who had expected more caution about the economy.
There are signs, however, that the market does not believe Fed forecasts that show it will be able to continue raising rates later this year and any signs of doubt from other Fed officials speaking this week may hurt the dollar.
The dollar was up just under 0.1 per cent against the basket of currencies that measures its broader strength.
“I think that the burden of proof for the dollar (to appreciate) is pretty high,” said Jeremy Stretch, head of currency strategy at CIBC in London.
“Even if there isn't going to be any outright criticism of Yellen, if you don't think US (10-year government bond) yields are going to be above 2.20 per cent then it is tough to buy into it.”
US market interest rates point to a less than 40 per cent chance of the Fed hiking rates by December and data on Friday showed investors had further reduced net bets on the dollar gaining ahead of last week's Fed meeting.
Friday's Bank of Japan meeting, however, played down even the chance of it beginning to reduce emergency stimulus for the economy and the yen was again weak on Monday, down 0.2-0.3 per cent against the dollar and euro.
Against the dollar, the euro was 0.1 per cent lower at $1.1185 after gaining about 0.5 per cent on Friday, taking little from French President Emmanuel Macron's landslide in parliamentary elections on Sunday.
Polls had widely favoured Macron and interest in French politics has declined since the risk of a far-right president who might take the country out of the euro abated with his defeat of Marine Le Pen last month.
Sterling was steady ahead of the formal start of negotiations on Britain's planned exit from the European Union, expected by many analysts to generate negative headlines for the currency in the weeks ahead.
“While medium-term (sterling) appreciation is still likely, the tail risks of a no-deal or disorderly Brexit scenarios have increased, and should weigh on (the pound),” currency strategists from Barclays wrote in a note to clients.
Prime Minister Theresa May is also still struggling to secure the support of Northern Ireland's DUP party she needs to proceed as a minority government after losing her majority 10 days ago.
The pound was little changed at $1.2796.