Australian dollar rebounds as USD bulls take a breather

The Australian dollar reversed course on Monday and gained as investors as investors pulled back a bit from recent dollar gains.

Last week, the U.S. dollar rallied to fresh 12-year highs against the euro on Friday as the diverging monetary policy stance between the Federal Reserve and the European Central Bank pressured the single currency lower.

The single currency had already weakened broadly this year after the ECB unveiled a trillion-euro quantitative easing program in January. The euro turned sharply lower after the bank started asset purchases on Monday, pushing euro area bond yields to new lows.

Lower bond yields make the single currency less attractive to investors at a time when expectations are mounting that the Federal Reserve could start rising interest rates mid-year.

In the week ahead, investors will be focusing their attention on Wednesday’s Federal Reserve policy statement to see if it would drop its reference to being patient before raising rates. Central bank

On Monday, Switzerland is to release data on producer prices and retail sales.

In the euro zone, Germany's Bundesbank is to publish its monthly report.

Later Monday Canada is to publish data on foreign securities purchases.