The dollar fell against the euro on Monday after comments from two members of the European Central Bank's governing council lowered expectations for increasing its bond-purchase program next month.
Ewald Nowotny, president of the National Bank of Austria, said in newspaper interview published on Monday that while the ECB is right to consider adding to its bond buying to boost inflation it should think very carefully before doing so. Nowotny added that there had been "no decisions," only discussions on the matter and that he would "advise more towards caution and a steady-hand policy."
Those comments followed a weekend interview with ECB President Mario Draghi that were seen as less dovish than his Oct. 22 comments following the bank's meeting that month. In a morning note, Morgan Stanley analysts said it appeared Draghi had stiffened the bank's policy stance by saying that more stimulus in December was an open question.
Last month, the ECB flagged the chances of further policy stimulus by expanding its "quantitative easing" bond-buying program and cutting its deposit rate further below zero in December.
The dollar had been rallying in the last few weeks on expectations that the euro zone would continue to add to monetary stimulus while the U.S. Federal Reserve is seen tightening policy soon, perhaps as early as December.
The euro also was bolstered by data from the euro zone which, although sluggish, showed some signs of improvement. Markit's final manufacturing Purchasing Managers' Index for the euro zone was at 52.3 last month, only slightly up from the September and preliminary October reading of 52.0.
"The euro zone was a little bit stronger this morning, and China is obviously still a concern. But overall, I think we're still playing the Fed card for the time being," said Fabian Eliasson, vice president for currency sales at Mizuho Corporate Bank.
U.S. manufacturing data largely matched expectations among analysts polled by Reuters. The Institute for Supply Management Manufacturing PMI showed manufacturing growth slowed in October for a fourth straight month, but did little to move the dollar against the euro.
The 50.1 ISM reading just beat Reuters economists' predictions of 50.0. A reading above 50 indicates growth in manufacturing. The ISM figures showed manufacturing employment slowed in October, but new manufacturing orders increased.
The dollar moved up against the slightly, gaining 0.1 percent to 120.76 yen after falling in early trading to session lows of 120.24 yen.