The dollar remained broadly steady on Monday as data showing a decline in U.S. prices bolstered bets that the Federal Reserve may cut interest rates in June, while the yen held near 152 per dollar, keeping traders on guard for the threat of intervention.

 

The price index for personal consumption expenditures, or PCE, rose 0.3 percent in February, the Commerce Department's Bureau of Economic Analysis reported Friday, compared with the 0.4 percent increase that economists had forecast.

 

The report also showed that consumer spending last month rose the most in a year, underscoring the economy's resilience. Most markets around the world were closed Friday.

 

Federal Reserve Chairman Jerome Powell on Friday said the latest U.S. inflation data was "consistent with what we would like to see," in comments that echoed his remarks after the Fed's policy meeting last month.

 

Markets now rate the probability of a Fed rate cut in June at 68.5% versus 57% at the end of last week, as CME's FedWatch tool shows. Traders also estimate the probability of a rate cut this year at 75 basis points.

 

Citi strategists say the Fed remains on track to start cutting rates in June. "If activity persists, the Fed could make three rate cuts this year. But further softening in labor markets leads us to expect five rate cuts this year."

 

The euro rose 0.06 percent to $1.07945, near the more than one-month low of $1.0769 hit last week. Sterling was at $1.2637, up 0.12% for the day.

 

The dollar index, which measures the U.S. currency against six peers, fell 0.038% to 104.42, but remained near the six-week high of 104.73 it reached last week.

 

The currency market has been centered on the yen as its move toward levels last seen in 1990 revives the threat of intervention by Japanese authorities.

 

The yen hit a 34-year low against the dollar at 151.975 on Wednesday and was last at 151.315 per dollar on Monday, a slightly stronger level.

 

Japan intervened in the currency market at 2022, first in September and then in October, when the yen fell to a 32-year low of 152 per dollar.

 

Japan's plans for the yen remain difficult to predict. Its fiscal year is over, which means the Bank of Japan doesn't have to worry about a sudden yen move affecting balance sheets.

 

But news of last week's emergency meeting of the three monetary authorities - the Ministry of Finance, or MOF, the Bank of Japan and the Financial Services Agency - and the officials' entreaties seemed to help bring the yen back from 34-year lows.

 

Finance Minister Shunichi Suzuki said Monday that he was not ruling out options against excessive currency movement and would react accordingly, reiterating his warning against a fast-moving yen.

 

Citi analysts still expect the Japanese authorities to intervene somewhere in the 152-155 per dollar zone, noting that the yen has weakened against the Chinese yuan as well.

 

"We do not expect the IFS to intervene in the Chinese yuan, but further appreciation of this currency pair could be a contributing factor to currency intervention by Japan," they said in a client note on Friday.

 

In other currencies, the Australian dollar rose 0.21% to $0.654 and the New Zealand dollar gained 0.20% to $0.599.

 

In cryptocurrencies, bitcoin was last up 1.83% to $70,927.00. Ether was last up 3.46% to $3,619.20.