Dollar falls against rivals with eyes on Fed

The dollar fell against the other major currencies on Monday, as investors eyed the release of U.S. new home sales data later in the day and as sentiment on the greenback remained vulnerable ahead of the Federal Reserve’s policy meeting this week.

USD/JPY dropped 0.55 to 111.10.

The yen dropped by 2.1% against the dollar on Friday after Bloomberg reported that the Bank of Japan could expand the negative interest rate policy it put in place in January at the conclusion of its two day policy meeting on Thursday.

Some investors believe the bank will not roll out further easing measures as it continues to assess the impact of the negative interest rate policy it adopted in January.

Most analysts expect the BoJ to cut its forecasts for growth and inflation as the strong yen and a severe earthquake this month which has disrupted supply chains cloud the economic outlook.

Meanwhile, traders were looking ahead to the Fed’s upcoming policy meeting, due to conclude on Wednesday for further indications on the pace and timing of future rate hikes.

EUR/USD gained 0.29% to trade at 1.1256.

The dollar was lower against the pound and the Swiss franc, with GBP/USD up 0.68% at 1.4501 and with USD/CHF sliding 0.44% to 0.9744.

The pound strengthened after U.S. President Barack Obama warned over the weekend that Britain would be at the “back of the queue” to arrange a trade deal with the U.S. in the event of a British exit from the European Union or Brexit.

The Australian and New Zealand dollars were higher, with AUD/USD up 0.12% at 0.7719 and with NZD/USD adding 0.19% to 0.6865.

Markets in Australia remained closed for the Anzac day holiday.

Elsewhere, USD/CAD held steady at 1.2642.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.36% at 94.77, off Friday’s one-week high of 95.18.