The U.S. dollar slipped on Monday as a pick-up in market sentiment drove stocks and riskier currencies higher, while the yen gained on reports that Japan will consider revising a decade-old blueprint for fighting deflation.
The dollar index - which tracks the greenback against a basket of six major currencies - fell 0.4% to 104.410 , reversing some of its gains from the previous week after the U.S. Federal Reserve and European Central Bank hiked rates.
A rebound in risk sentiment across markets pushed European stocks higher after a bruising selloff last week, while currencies including the euro and sterling retraced some of their losses from the previous two sessions.
The euro gained 0.4% to $1.06260 , while sterling strengthened 0.7% to $1.22195 . However, both remained lower than their levels before last week's central bank moves.
"Markets are trying to find their feet a bit," said Kenneth Broux, currency strategist at Societe Generale. "I wouldn't hang my hat on the price action this morning."
The Japanese yen gained 0.4% to 136.155 per dollar on reports Japan is considering revising a key monetary policy after a new Bank of Japan governor is appointed in April.
The government will consider revising a joint statement it signed in 2013 that commits the central bank to meeting a 2% inflation target as soon as possible, sources said.
"The upshot is this perhaps provides timely flexibility, but it doesn't bind monetary policy bias one way or another," said Vishnu Varathan, head of economics and strategy at Mizuho Bank, adding more clarity was needed for a bigger impact on the yen.
