By Sam Forgione
NEW YORK (Reuters) - The U.S. dollar eased against a basket of major currencies on Monday after U.S. data showing retreating inflation and a downward revision to consumer spending dampened expectations for a swifter pace of Federal Reserve interest rate increases.
The dollar index (DXY), which measures the greenback against a basket of six major currencies, eased from a 1-1/2-week high of 96.399 to a session low of 95.836 after the Commerce Department said consumer spending edged up 0.1 percent and the January reading was downwardly revised to 0.1 percent.
The data also showed U.S. inflation moderated last month, with a price index for consumer spending dipping 0.1 percent after nudging up 0.1 percent in January.
The euro gained against the dollar to $1.1218, its highest level since March 23. The data dampened expectations that the Fed would hike rates again in April or June after hawkish remarks from multiple Fed presidents last week had raised expectations for a faster pace of rate increases.
"It looks like we’ve had an unimpressive start to growth in Q1, and that’s maybe tempering some of the recent rise in Fed tightening expectations for June," said Vassili Serebriakov, currency strategist at BNP Paribas (PA:BNPP) in New York.
Low trading volumes likely contributed to price activity since European markets were closed for the Easter Monday holiday, analysts said. The weak data was enough to crimp the dollar index's rally of more than 1 percent last week.
Analysts also said traders were awaiting comments from Fed Chair Janet Yellen on Tuesday. Traders will monitor the speech to determine whether or not it confirms recent hawkish rhetoric from Fed officials, said Mazen Issa, senior currency strategist at TD Securities in New York.
More U.S. economic data will be released later this week, including March non-farm payrolls and consumer confidence data.
The dollar index was last down 0.18 percent at 95.965. The euro was last up 0.28 percent against the dollar at $1.1195 <EUR=>, and the greenback was down 0.39 percent against the Swiss franc at 0.9733 franc
The dollar was up 0.27 percent against the Japanese yen at 113.35 yen <JPY=>.
On Wall Street, the benchmark S&P 500 (SPX) stock index was last up 0.12 percent.