The dollar fell against most currencies on Monday, pressured by data showing persistently low wages that will likely constrain the Federal Reserve from raising interest rates more than three times this year.
Friday's non-farm payrolls report showed U.S. job gains for February were much higher than expected, but wage inflation, a closely-watched indicator by the Fed, remained subdued.
"Mixed messages on America's labor market last week largely offset and, importantly, failed to move the dial in favor of faster rate hikes from the Fed," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
"To excite the dollar and move the needle for the Fed to raise rates at a quicker pace, wage growth would need to move above 3 percent," he added.
Average hourly earnings edged up four cents, or 0.1 percent, to $26.75 in February, a slowdown from the 0.3 percent rise in January. That lowered the year-on-year increase in average hourly earnings to 2.6 percent from 2.8 percent in January.
The dollar also struggled as a result of uncertainty about U.S. trade protectionism, analysts said, after President Donald Trump imposed tariffs on steel and aluminum imports, except those from Mexico and Canada.
"We remain cautious on the outlook for the U.S. dollar and reiterate that tariff action even on a limited scale has not reflected positively on the dollar overall in the past," said Shaun Osborne, chief currency strategist at Scotiabank in Toronto. "Generally speaking, we think that protectionist regimes do not necessarily support a strong domestic currency either."
The , which tends to perform well when markets are anxious, gained as traders eyed a suspected cover-up of a cronyism scandal involving Japanese Prime Minister Shinzo Abe and his close ally, Finance Minister Taro Aso.
The euro, meanwhile, gained 0.22 percent against the dollar to $1.2332, pushing the dollar index down 0.19 percent at 89.92.
After a strong start to 2018, the euro remains below the three-year peak hit in February of $1.2556.
A more-dovish-than-expected central bank meeting last week continued to weigh on the single currency.
The euro fell last week as the European Central Bank said inflation expectations remained subdued and that monetary policy would remain "reactive."
"The euro is still suffering in the aftermath of the ECB meeting," said Alvin Tan, a currencies analyst at Societe Generale. "The cross currents are affecting the euro."