SINGAPORE, Nov 20 — The dollar languished near an over two-month low against its major peers today, struggling to make headway on the view that US rates have peaked, with attention now on how soon the Federal Reserve could begin easing monetary conditions.

A key rate decision from China meanwhile took centre stage in Asia, where expectations are for Beijing to leave lending benchmark rates unchanged at a monthly fixing on Monday.

Against the dollar, the euro stood near a more than two-month high hit on Friday and last bought US$1.0900, holding steady ahead of flash PMI readings in the euro zone due later this week.

"(The) euro zone PMI surveys will be watched closely for further signs the region is on the cusp of, or already in, recession,” said economists at Wells Fargo in a note.

"In our view, the chances of at least a mild euro zone recession beginning in the latter part of 2023 are now becoming increasingly likely.”

The dollar index, which measures the greenback against a basket of six currencies, rose 0.04 per cent to 103.95, but was struggling to break away from last week’s two-month trough of 103.79.

The index had fallen nearly 2 per cent last week, its sharpest weekly decline since July, after a slew of weaker-than-expected US economic data and in particular, an inflation reading that came in below estimates, have led markets to price out the risk of further rate hikes from the Fed.

Focus now turns to how soon the first rate cuts could come, with futures pricing in a 30 per cent chance that the Fed could begin lowering rates as early as next March, according to the CME FedWatch tool.

The decline in the greenback brought some reprieve for the Japanese yen, which sat on the stronger side of 150 per dollar and was last at 149.90 per dollar.

Sterling slipped 0.06 per cent to US$1.24545, but was not far from a two-month high of US$1.2506 hit last week.

"Market pricing for FOMC policy is likely to remain pretty steady (this week), so the dollar should have very few catalysts to move it around this week,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia. "If we do see risk appetite improve again, then the dollar can definitely weaken further.”

Ahead of China’s loan prime rate (LPR) decision later in the day, the offshore yuan firmed near a three-month high against the dollar and last stood at 7.2214 per dollar.

The Australian dollar, often used as a liquid proxy for the yuan, fell 0.17 per cent to $0.6504, while the New Zealand dollar slipped 0.04 per cent to $0.5990.

"I think the theme of a soft Chinese economic recovery will persist for a while,” said Kong.

"Until we get a more meaningful recovery in the Chinese economy, I think that will be a headwind for the (yuan), Aussie and the kiwi in the near term.” — Reuters