Dollar hovers around 15-month low

LONDON/SYDNEY, July 17 (Reuters): The dollar edged lower on Monday against a basket of currencies after suffering its biggest weekly drop of the year as traders waited on economic data and policy decisions before selling it down any further.
The euro continued climbing, rising 0.1 per cent to $1.1234, after hitting a fresh 16-month high earlier in the day. Versus the yen the dollar fell 0.28 per cent to 138.36 yen per dollar, after touching its lowest against the Japanese currency in two months on Friday.
"Last week's US disinflation shock altered the FX landscape, but a few days without key data releases will tell us whether that impulse can keep the dollar on the back foot as the FOMC risk event draws nearer," Francesco Pesole, FX strategist at ING, said.
"Euro/dollar appears a bit overstretched in the short term and could face a correction this week," he added.
Last week's US inflation data fuelled investors' bets that the Federal Reserve was close to the end of its rate hike cycle, and the dollar index had its biggest weekly decline since November 2022, falling 2.25 per cent on the week.
US producer prices barely rose in June and the annual increase in producer inflation was the smallest in nearly three years, data showed on Thursday, a day after data showed consumer prices rose modestly last month.
Over in Germany, the Bundesbank said on Monday the euro zone's largest economy may shrink this year by more than the 0.3 per cent decline expected only a few weeks ago, despite a small bounce in the second quarter.