US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, snapped a two-day downtrend with a U-turn from the lowest level since late February.

That said, the inflation gauge rose from 2.55% to 2.60% by the end of Monday’s North American trading session.

A drop in the US inflation expectations also joins the US dollar’s south-run, amid repeated chatters of a 50 bps rate hike from the Fed, keeping the greenback bulls away from the table.

The US Dollar Index (DXY) extends the first weekly loss in seven as mixed covid signals from China, mostly positive, join the repeated Fedspeak around a 50 bps rate-hike, contrary to the recently hawkish comments from the ECB policymakers. Also weighing on the greenback were the headlines from Japan where US President Joe Biden mentioned that he is considering reducing tariffs on China.

Amid these plays, Wall Street ended Monday on a positive note and the US Treasury yields also rose as traders turn cautiously optimistic prior to the key data/events.

Also read: Forex Today: Dollar continues to shed ground