2018.02.2002:33:00UTC+00Dollar Bounces Back but Worries over Deficit and Inflation Persist

The dollar continues to pull back from three-year lows hit the previous week. However, its outlook was clouded by concerns that the swelling U.S. fiscal deficit could disrupt the economy.

The dollar index, which tracks the greenback against a basket of six major rivals, stood 0.3 percent higher at 89.346, continuing its rebound from a three-year low of 88.253 set on Friday.

The greenback has been weakening in recent months, with the positive impetus from rising U.S. interest rates counterbalanced by several bearish factors.

Worries about the U.S. budget deficit, which is projected to balloon to over $1 trillion in 2019 amid a government spending splurge and large corporate tax cuts, have also weighed on the dollar.

The dollar gained 0.15 percent at 106.760 yen, rising from a 15-month trough of 105.545 set on Friday.

The euro fell 0.15 percent to $1.2387, retreating from Friday's three-year peak of $1.2556.

U.S. markets were closed on Monday for a holiday, and the focus will be on whether Wall Street can maintain its recovery once trading resumes.

The Dow gained 4.5 percent last week, regaining more than half of the territory lost during a sharp downturn earlier in the month.