Dollar a spectator to China news, yen ponders rate risks

There was more action in bitcoin, which gained 1.2% to $68,341 after surging more than 7% on Monday. The blockchain asset has benefited from flows into cryptocurrency exchange-traded funds, most notably in the United States. Early news out of China's National People's Congress (NPC) contained few surprised with Beijing sticking with an economic growth target of 5% and a budget deficit of 3%.

Analysts say meeting the target will be a challenge as a protracted property crisis, low consumption, slow global growth and geopolitical tensions drag on activity. The yuan was little changed at 7.1987, as markets hoped more concrete stimulus measures would emerge.

The Japanese yen held steady after data showed Tokyo core inflation sped up to 2.5% in February, from 1.8% the previous month. The measure excluding food and energy did slow to 3.1%, but stayed above the Bank of Japan's 2% target. "Inflation jumped to well above 2% and will remain around that level for a few months," by Marcel Thieliant, head of Asia-Pacific at Capital Economics. "Accordingly, we're sticking to our forecast that the Bank of Japan will hike interest rates into positive territory next month."

Many analysts expect rates to rise to zero in April after Japan's wage round ends. The dollar was a fraction lower at 150.44 yen, having again shied away from resistance around 150.85, which has capped the currency for more than three months now.

A break higher would open the way to November's top at 151.92, but would also run the risk of provoking Japanese intervention to buy the yen. Markets currently imply around a 64% chance the Federal Reserve will start cutting U.S. rates in June and ease by around 75 basis points this year.

Fed Chair Jerome Powell has a chance to update investors on his own outlook when he appears before lawmakers on Wednesday and Thursday. The euro idled at $1.0853, having tested resistance around $1.0866. The dollar index, which measures the currency against six major peers, was unchanged at 103.840.

The European Central Bank (ECB) holds a meeting on Thursday and markets are convinced it will keep rates at 4.0%. Futures imply an 88% probability that cuts will start in June and have priced in 89 basis points of easing for 2024. "The persistence of sticky services CPI and signs of services picking up more broadly in survey data suggest that ECB will continue to highlight patience and further maintaining of restrictive policy," argued analysts at Westpac.

"After holding tests below $1.0800 last week, EUR/USD looks set to test the $1.0900-50 area, the middle its range since late December." Sterling steadied at $1.2692 ahead of the British budget on Wednesday. Finance Minister Jeremy Hunt has been trying to dampen speculation about big pre-election tax cuts.