Dollar trading near multi-month lows, restrained by debt nerves

The U.S. dollar traded close to multi-month low levels on Monday, as market sentiment remained unsettled by the Treasury's commitment to buy back longer-dated bonds. Traders were eagerly awaiting details of sanctions against Iran and policy speeches from the U.S. and Japan. The Canadian dollar dropped 0.2% in Asia trade, while the Australian and New Zealand currencies neared three-month highs.

The euro and yen remained strong, while the dollar's weekly decline against bitcoin was its largest in nearly three and a half years. Last week, the U.S. Treasury announced it would double buybacks to $4 billion per operation, a move that spooked traders and affected the dollar's performance. Analysts noted that this interventionist signal leaves the dollar as the remaining tool to encourage foreign inflows, financing the U.S.'s current account deficit.

The Federal Reserve Chairman's upcoming remarks and Bank of Japan's deputy governor's potential comments on interest rate hikes will also be key factors influencing the dollar and other currencies.