- The dollar edged lower against most major currencies on Monday after Federal Reserve Chair Janet Yellen said the U.S. economy still requires monetary support due to a sagging labor market, while soft factory data out of the Chicago area weakened the greenback as well.

In U.S. trading on Monday, EUR/USD was up 0.23% at 1.3783.

In her first major speech as Fed Chair, Yellen told the National Interagency Community Reinvestment Conference in Chicago, Illinois, that the U.S. economy still needs monetary support to ensure more sustained recovery.

"I believe it is appropriate for the Federal Reserve to continue to provide substantial help to the labor market, without adding to the risks of inflation, is because of the evidence I see that there remains considerable slack in the economy and the labor market," Yellen said in prepared remarks of her speech.

The Fed is currently purchasing $55 billion in bonds a month to spur recovery, a monetary policy tool known as quantitative easing that suppresses interest rates to prop up the economy, weakening the dollar as a side effect.

Yellen''s words sent investors reevaluating the pace at which the U.S. central bank will taper its bond-buying program let alone begin hiking benchmark interest rates.

"I think this extraordinary commitment is still needed and will be for some time, and I believe that view is widely shared by my fellow policymakers at the Fed," Yellen said

Elsewhere, data revealed that manufacturing activity in the Chicago region expanded at a slower rate than forecast in March, as new orders fell.

The Chicago purchasing managers’ index fell 55.9 from 59.8 in February. Analysts had expected the index to tick down to 59.0.

Meanwhile in Europe, the euro zone''s consumer price index slowed to 0.5% this month from 0.7% in February, undershooting expectations for a reading of 0.6%. The European Central Bank targets an inflation rate of just under 2%, and March''s figure was the lowest since November of 2009.

The report showed that core inflation rose 0.8% in March, in line with forecasts, but down from 1.0% in February.

While inflation rates missed consensus forecasts, expectations for the European Central Bank to loosen policy sooner or later have been priced into trading by many investors, which gave the single currency room to shrug off soft consumer inflation numbers.

Separate expectations that the ECB will still remain in a wait-and-see mode at a policy meeting on Thursday due to sentiments that prices are soft but not deflationary supported the euro as well.

The dollar was up against the yen, with USD/JPY up 0.36% at 103.20, and down against the Swiss franc, with USD/CHF down 0.34% at 0.8838.

The greenback was down against the pound, with GBP/USD up 0.21% at 1.6676.

In the U.K., the Bank of England reported earlier that U.K. mortgage approvals fell to 70,309 in February, the lowest level since October 2013. Market expectations had been for a slight decline to 75,000 from January’s more than six-year high of 76,753.

The BoE also said business lending was down ₤750 million compared with the previous month.

Net lending rose by ₤2.3 billion last month, in line with forecasts, up from ₤2.1 billion in January.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.05% at 1.1055, AUD/USD up 0.26% at 0.9272 and NZD/USD up 0.22% at 0.8675.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.12% at 80.25.

On Tuesday in the U.S., the Institute of Supply Management is to publish a report on U.S. manufacturing growth.

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