A drop in U.S. bond yields pressured the dollar against the yen on Monday, while the euro is attempting to regain lost ground after enduring losses at the end of last week on revived concerns on the upcoming French elections.
Markets, already on edge over the possibility of a win for far-right, anti-European Union candidate Marine Le Pen, were surprised after two French hard-left candidates late on Friday said they were discussing cooperation in their bid for the country's presidency.
The fear in the markets is that a joint left-wing front may cause the centrist vote to switch toward Le Pen.
The latest upsurge in European political risks bumped the dollar down against the yen by pulling Treasury yields down to one-week lows of 2.4 percent.
The dollar changed slightly at 113.090, very close from 112.620, its lowest since February 9.
The dollar index which measures the greenback against other major currencies was steady at 100.930. The index had soared for a straight 10 days earlier this month before plummeting regardless of a series of strong U.S. data.
Koji Fukaya, president of FPG Securities in Tokyo said, “It is hard for dollar/yen to move higher when the 10-year Treasury yield, which initially rose to as high as 2.6 percent, is not stuck around 2.4 percent.”
The 10-year Treasury yield went up above 2.6 percent in December in a two-year high when expectations were at their highest that U.S. President Donald Trump would commence a large fiscal stimulus and reflationary policies once he becomes presidents.
The euro edged up 0.1 percent to 1.0613 after losing 0.6 percent on Friday.
The Australian dollar went down 0.1 percent to $0.7670,
The New Zealand Dollar dropped 0.1 percent at $0.7177.