RTTNews - The dollar ran out of steam versus other major currencies on Monday after seeing strength in the previous few sessions. After getting brutalized in the month of May, the dollar came to life last week, but could not sustain its momentum, coming under heavy pressure in mid-day dealing.

Traders are conflicted about the Federal Reserve's next step in dealing with the ongoing recession. Many are betting policy makers will raise rates sooner than expected, hoping to prevent inflation if the world's biggest economy shows genuine signs of growth.

Others presume that the Fed will be hesitant to hike rates for too long, not wanting to snuff out any fragile attempts at economic growth. Whatever the case, with financial Armageddon now apparently off the table, its hard to imagine that dollar moving back towards its multi-year highs set during the throes of the financial crisis, when traders were desperate for a safe haven.

The dollar hit a 11-day high of 1.3804 versus the euro, but fell a penny from there over the course of the afternoon.

Results of European parliament elections show the center-right European People's Party (EPP) is set to continue to hold power in the parliament. Center-right leaders hailed the victory as a vote against stimulus-spending and corporate bailouts, pledging to forge with conservative approaches to the economic crisis.

Meanwhile, Standard & Poor's downgraded Ireland's credit rating for the second time this year, citing fears that the government is set to incur a higher-than-expected cost for supporting banks.

The dollar gave back some of June's gains versus the sterling, slipping to 1.6070 from a 2-week high of 1.5801. Still, the dollar appears stable after a free-fall in May resulted in a 6-month low of 1.6662.

On the flip side, the dollar held onto its recent gains versus the yen, staying near 98.50 after hitting a 4-week high of 98.87 in overnight trading.

The dollar also held its most of its ground versus the loonie, hovering near C$1.12. The seasonally adjusted annual rate of Canadian housing starts inched higher in May, according to an industry report which predicted that housing starts would improve over the course of the year.

Housing starts increased to 128,400 units in May from 117,600 units in April, Canada Mortgage and Housing Corporation (CMHC) said in its monthly report released Monday morning. The results were roughly in line with expectations. Economists anticipated 126,000 starts.

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