By Peter Nurse

Investing.com – The U.S. dollar edged higher in early European trade Monday, but was on track for a second straight monthly loss ahead of the release of more economic data which is likely to shed more light on the future path of interest rates.

At 02:55 ET (06:55 GMT), the , which tracks the greenback against a basket of six other currencies, traded marginally higher at 101.575, but was still on course for a monthly loss of around 1%, having fallen over 2% in March.

Concerns that the U.S. economy is heading for a sharp slowdown have weighed on the dollar index of late, after it hit a 20-year high late last year.

The is widely expected to raise rates by another 25 basis points at next week’s policy-setting meeting as inflation has proved to be stickier than expected, but the focus will be on what happens next amid growing expectations that the central bank will start a loosening cycle this year.

The U.S. data calendar is largely empty Monday, but first-quarter data will be carefully studied on Thursday. The reading is expected to show that growth slowed from the prior quarter.

The – the Fed’s preferred inflation gauge – is also due later this week, and is expected to show that inflation remained stubborn through March.

dropped 0.1% to 1.0978, ahead of the release of the widely watched German , which is expected to show corporate confidence improved slightly in April.

data released Friday showed that eurozone business activity gathered pace in April, reducing concerns about an impending recession in the region.

The eurozone is due to release advance data on first quarter on Friday, and is expected to show small growth on the quarter, while April inflation reports from the region’s largest economies , and are likely to point to inflationary pressures remaining elevated.

fell 0.1% to 1.2419, dropped 0.3% to 0.6671, while edged higher to 134.19, ahead of a policy meeting on Friday – the first under new Governor Kazuo Ueda. 

Ueda is expected to maintain the bank’s ultra-loose policy for now, but could provide cues on an eventual plan to tighten, especially as inflation remains stubborn.

rose 0.1% to 6.9017, amid uncertainty over the extent and speed of a Chinese economic recovery.

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