A popular gauge for the U.S. dollar slipped early Monday, putting it on track for its fourth down day in a row.
While the index is holding on to a slight month-to-date gain, strategists say sentiment has turned more downbeat.
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What are currencies doing?
The ICE U.S. Dollar Index DXY, -0.12% — measuring the greenback against a half-dozen counterparts — fell 0.3% to 92.271, down from 92.509 late Friday in New York.
On Friday, the gauge suffered its third-straight loss, as well as its first weekly decline after three consecutive weekly gains. It’s up 0.5% so far in May, with its year-to-date gains at 0.2%.
A broader measure of the greenback, the WSJ Dollar Index BUXX, -0.07% , slipped 0.2% to 86.05.
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The euro EURUSD, +0.2261% rose to $1.1992, up from $1.1942 late Friday, while the pound GBPUSD, +0.3914% advanced to $1.3593 from $1.3542.
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But the greenback strengthened slightly against the Japanese yen USDJPY, +0.13% , buying ¥109.51 versus ¥109.39 late Friday in New York.
The currencies of the U.S. partners in the North American Free Trade Agreement performed better on Monday and strengthened against their U.S. rival, as market participants are awaiting progress on the renegotiation of the trade pact. The buck slipped 0.3% to C$1.2759 against the Canadian USDCAD, -0.2110% , and fetched 19.3772 Mexican pesos USDMXN, +0.4963% , down 0.2%, according to FactSet.
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What’s driving the market?
The U.S. dollar extended its losses against major rivals on Monday, setting out for the fourth day of weakening in a row. This in turn led to analysts calling the top of the buck. In the weeks leading up to this losing streak, the dollar had outperformed its rivals, gaining a whopping 1.9% in April, the most since the presidential election in November 2016.
Meanwhile, comments from Cleveland Federal Reserve President Loretta Mester, who is seen as a relatively hawkish Fed official, may have limited the greenback’s losses on Monday. Mester said the U.S. central bank might have to raise interest rates above 3%, in a speech Monday in France. Rising interest rates tend to push a local currency higher.
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Elsewhere, the euro was gaining even as two Italian political parties reached a deal that puts the country on course to be led by an antiestablishment and euroskeptic governing coalition. Italy’s politicians have struggled to form a government in the aftermath of its early March election.
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What are strategists saying?
“After a number of weeks where the dollar bulls have habitually seen the glass as half full, buying into weakness and breaking key medium- and long-term technical resistance, the mood has slipped,” said Richard Perry, a Hantec Markets analyst, in a note.
“This may only be a temporary blip that could easily be brought back in line by a strong read on tomorrow’s retail sales numbers, but for now the buyers are taking a timeout,” Perry added.
“With a limited economic calendar today, politics is in focus to an extent with the increasing prospect of a populist government forming in Italy, whilst the China-U.S. trade dispute is also back in the spotlight after President Trump tweeted on Sunday that he is working with the Chinese president,” he said.
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What else is in focus?
There are no top-tier U.S. economic reports scheduled for Monday.
Check out: MarketWatch’s Economic Calendar
St. Louis Fed President James Bullard is due to speak later Monday, talking about cryptocurrencies at the CoinDesk Consensus 2018 conference in New York at 9:40 a.m. Eastern Time.
In other assets, U.S. stocks including the Dow Jones Industrial Average DJIA, +0.54% started the week on a higher note, adding on from last week’s gains.
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U.S. Treasury yields edged higher, with the 10-year bond TMUBMUSD10Y, +0.68% last yielding 2.988%, up 2 basis points.