Anna 
In the early stages of European trade on Monday, the U.S. dollar modestly declined, while the Japanese yen retraced some of its recent gains ahead of a crucial policy meeting by the Bank of Japan.
At 05:35 ET (09:35 GMT), the Dollar Index, gauging the greenback against a basket of currencies, was down 0.1% at 102.052, following a roughly 1.3% dip last week. The retreat of the dollar was triggered by the Federal Reserve’s dovish pivot, signaling potential rate cuts at its latest policy meeting. Traders are now anticipating an interest rate reduction, likely by the start of the summer next year.
The U.S. economic calendar for Monday is relatively sparse, with the focus of the week shifting to the personal consumption expenditures price index on Friday, a key inflation gauge for the Federal Reserve. Analysts anticipate this data will reveal a decrease in consumer price pressures.
Chicago Fed President Austan Goolsbee and Raphael Bostic are expected to share their views on future policy later on Monday and Tuesday, respectively.
USD/JPY traded 0.1% higher at 142.30, with the Japanese yen relinquishing some of its nearly 2% gains from last week. The Bank of Japan concludes its two-day monetary policy meeting on Tuesday, leaving traders uncertain about when the dovish central bank will begin unwinding its ultra-loose policy settings.
EUR/USD saw a 0.3% increase to 1.0922, benefitting from relatively hawkish comments from the European Central Bank compared to the dovish stance of the Federal Reserve. However, the euro remains burdened by a darkening growth outlook in the eurozone, exemplified by the unexpected deterioration of German business morale in December.
GBP/USD rose 0.1% to 1.2687, with upcoming U.K. inflation data scheduled for later in the week. Expectations are that consumer prices in the U.K. rose 4.3% in November on an annual basis, reflecting a drop from the previous month but still exceeding the Bank of England’s 2% target.
In other currency pairs, USD/CNY traded 0.2% higher at 7.1318, while AUD/USD rose 0.6% to 0.6734, with the Australian dollar, a significant indicator of risk sentiment, maintaining a positive tone.
