Dollar holds tight range as investors await U.S. inflation data

The dollar index stood at 92.622, having retreated from a two-week high of 92.887 hit earlier on Monday while the euro changed hands at $1.18105, having bounced back from Monday's low of $1.17705, its lowest since Aug. 27.

An immediate focus is on U.S. consumer price data due at 1230 GMT.

Economists expect core CPI, an index which strips out volatile energy and food prices, to have risen 0.3% in August from July. Its annual inflation is seen easing slightly to 4.2% from 4.3% in July.

Overall consumer price inflation is expected to dip slightly to 5.3% from 5.4% in July.

The Fed will hold its policy meeting next week. The Wall Street Journal reported on Friday that Fed officials will seek an agreement to begin paring bond purchases in November.

The yen eased slightly to 110.005 yen to the dollar but stayed in its familiar territory over the past few weeks around 110.

Limited moves in the currency pair saw traders reducing expectations for market swings.

Implied volatilities on dollar/yen options have fallen to historic levels, with one-month volatility falling to as low as 4.625%, its lowest since February last year just before the pandemic.

Risk-sensitive currencies were little moved for now, with sterling at $1.3836 and the Australian dollar at $0.7362.

While the world's stock markets stood near record highs, supporting risk sentiment, some analysts warn of growing headwinds to risk sentiment.

Many investors were also keeping an eye on developments in China, where cash-strapped property developer Evergrande struggled to fend off solvency concerns while a relentless wave of regulatory moves by Beijing hit big tech firms.

In the crypto market, Bitcoin dropped to as low as $43,400, its lowest in almost a week and last stood at $44,973 while ether also eased to $3,283.