The dollar slumped on Monday, falling below its 15 month highs after Friday's jobs data, as investors reassigned rate increase expectations and central banks' tolerance of inflation.
Last week, the U.S. Federal Reserve stood to its view that current high inflation is expected to be transitory.
The Reserve Bank of Australia RBA also pledges to be patient with policy earlier in the week as the Bank of England surprised the market by keeping rates on hold.
The dollar index went down 1% on the day, at 94.176, since it reached its highest level in more than a year on Friday, following stronger than expected payrolls data.
The market s sales dollars are selling because the central banks are not going to increase quite as quickly as we thought, said Neil Jones, head of FX sales at Mizuho.
Jones said less slow rate hikes benefits risk assets such as stocks that are inversely Correlated with the U.S. dollar.
The Fed's next test of the approach to inflation is U.S. CPI data due on Wednesday.
The Fed will tighten its policy going forward, and speed up rate increase plans if the labour force participation does not improve as expected, said Lee Hardman, strategist of the MUFG, in a note to clients.
The data showing the Commodity Futures Trading Commission showed speculators scaled back their net long position on the dollar for the fourth week running in the week to Nov. 2.
The spokeswoman for Federal Reserve vice Chair Richard Clarida will talk later in the session about inflation and monetary policy.
We have heard a few Fed hawks questioning the need for patience when it comes to tightening, but similar remarks from centralists like Clarida would certainly send the U.S. short-term rates and the dollar higher, ING FX strategists wrote in a note to clients.
On the day, the Australian dollar was up 0.1%, which is seen as a liquid proxy for risk appetite.
The New Zealand dollar was 0.6% higher at $0.7163 after Prime Minister Jacinda Arden announced that measures on the lock down will be phased out by the end of the month.
The restrictions on COVID-19 in Auckland are expected to be decreased as vaccine rates rise.
The euro was a touch higher, up 1% at $1.1578.
The European Central Bank's long-standing message that high price growth is temporary, said Philip Lane, the bank's chief economist, repeating the bank's long-standing message that high price growth is temporary.
Britain's pound was up 0.4% at $1.3537, recovering from the five-week low it hit last week after the Bank of England meeting.
A record trade surplus was found in China's export growth in October, while imports missed expectations, which resulted in a record trade surplus.
The yuan was steady against the dollar, holding just under the key 6.4 level.
According to traders, Chinese producer and consumer price data are expected to surging to 12% on Wednesday as producer price growth is seen as a result of further price pressure to come through global supply chains.
The overall theme for USD-CNY is the stability, said the senior economist of Commerzbank, Hao Zhou, wrote in a client note that the strong trade surplus this year should have somewhat supported the CNY exchange rates.
The price of cryptocurrencies up 4.2% at around $65,937, which was not far from a new all-time high - while ether hit a record peak of $4,768.