Dollar higher against yen, euro gains after inflation report

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Investing.com - The dollar rose to more than two-week highs against the yen on Monday as market sentiment was boosted by prospects for stimulus measures by China, while the euro strengthened after weak euro area inflation data fuelled expectations for further easing from the European Central Bank.

USD/JPY was up 0.38% to 103.22, the highest level since March 11.

Risk appetite returned to markets after Chinese premier Li Keqiang said Friday the country has policies in place to support economic growth. The remarks eased concerns over recent signs of a slowdown in the world's second-largest economy.

EUR/USD was up 0.23% to 1.3783, up from session low of 1.3724.

The single currency briefly touched session lows after preliminary data showed that the annual rate of inflation in the euro zone fell to the lowest level since November 2009 in March.

Consumer inflation in the euro area slowed to 0.5% this month from 0.7% in February, undershooting expectations for a reading of 0.6%. The ECB targets an inflation rate of just under 2%.

The report showed that core inflation rose 0.8% in March, in line with forecasts, but was down from 1.0% in February.

The euro moved higher amid expectations that the ECB could take steps to bolster the fragile recovery in the euro area at its upcoming policy meeting on Thursday. Last month the central bank left rates on hold, but indicated that it was prepared to take decisive action if the inflation outlook continued to deteriorate.

The pound was unchanged against the dollar, with GBP/USD trading at 1.6635, while USD/CHF was down 0.23% to 0.8847.

Sterling showed little reaction after data on Monday showed that U.K. mortgage approvals fell in February while business lending also declined.

NZD/USD remained supported at 0.8656, holding just below the two-and-a-half year peaks of 0.8696 struck on Friday.

The Australian dollar backed off Friday's four month highs, with AUD/USD sliding 0.19% to 0.9229, while USD/CAD dipped to 1.1052.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, slid 0.11% to 80.26.

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