The dollar continued its downward trend from last week on Monday, plunging to a more than two-month low as traders reiterated their view that U.S. rates have raised and focused on when Fed might start cutting.

The possibility of additional rate hikes by the Fed has been priced out by the markets following a string of less positive than anticipated U.S. economic data last week, especially an inflation figure that fell short of expectations.

The focus now shifts to the potential timing of the first-rate cuts. The CME FedWatch tool shows that futures pricing places the Fed's potential rate reduction as early as March at about a 30% possibility.

The dollar index dipped 103.46, its lowest point since September 1st, continuing an almost 2% decrease from the previous week - the worst weekly drop since July.

EUR/USD traded at $1.0926 before the release of flash PMI figures in the euro zone during this week

GBP/USD showed little movement at $1.2467, after previously teasing an almost two-month peak.

The Japanese Yen continued to strengthen relative to the dollar, closing at 148.42, up almost 0.8%.