No respite for the US dollar as weakness continues.

It was another bad day for the greenback, although it held within familiar levels against most major rivals. The EUR and GOLD were the best performers, as EUR/USD peaked at 1.2266 its highest since January.

GBP/USD, on the other hand, eased on poor CBI sales figures, although it settled at around 1.4150. Commodity-linked currencies finished the day pretty much unchanged against the greenback.

Federal Reserve’s Vice Chairman Richard Clarida said that he took notice of the “very unpleasant surprise” resulting from April’s inflation, adding that he agrees with the FOMC Minutes that there could be a time in upcoming meetings to discuss tapering.

Inflation expectations in the US somehow cooled down, as Federal Reserve officials keep pouring cold water on expectations of a change in the current monetary policy.

The dollar fell as government bond yields declined. The yield on the benchmark 10-year Treasury note fell to 1.56%, its lowest in two weeks. Wall Street was unable to take advantage of easing inflation concerns, with the three major indexes ending the day with modest losses.

Gold trades a handful of cents above the $1,900 level, heading firmly higher and poised to break above it. We could see some pullback around the $1900 level before next resistance area around $1925-$1930. We could see some potential sellers enter the market here. However, any fear regarding inflation or an increase in the 10Y note could see higher prices. Gold remained unchanged, with WTI trading around $ 65.85 a barrel.

The RBNZ will announce its monetary policy decision early on Wednesday.