The dollar rallied on Monday amid the ongoing debate on the Federal Reserve's plans for scaling back monetary stimulus with expectations rising that strong U.S. data will prompt the Fed to act sooner rather than later. Market players said the near-term outlook for the dollar would hinge on U.S. data due this week, such as Tuesday's retail sales reading which most expect to be strong. The dollar index rose 0.4 percent to 81.42, moving away from a seven-week low touched last week.
The dollar slipped against the yen earlier on Monday after data showed Japan's economy grew an annualized 2.6 percent in the period from April to June, a third straight quarter of expansion but slower than expected. The dollar bounced back after running into bids near 96.00 yen as buyers emerged at lower levels. The U.S. currency was last up 0.6 percent at 96.78 yen, also pulling away from a seven-week low set last Thursday.
The euro was down 0.3 percent to $1.3303. Support was cited around $1.3269, the 61.8 percent Fibonacci retracement of the July 2-8 uptrend. The single currency was under pressure after German news magazine Der Spiegel reported on Sunday the Bundesbank was warning Greece would need more financial assistance by early next year.
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