Reports suggest that hedge funds may be rotating away from the narrow rally in US equities towards better valuations in Europe. If so, the Dollar could soften further.

Today, the best chance for this Dollar decline to extend a little further will be the release of the NFIB small business optimism data for June. A further decline in pricing intentions in this survey will add weight to the view that inflation is coming lower. (The main event, however, remains Wednesday's release of June CPI.)

We do not expect big FX moves today, but DXY could continue drifting toward the 101.50 area.