U.S. Dollar Weakens On Tax Reform Woes

The U.S. dollar dropped against its major rivals in the European session on Monday, amid lingering uncertainty over the progress of tax reform in the U.S.

Although the House of Representatives passed the tax reform bill last week, the legislation face tougher fight in the Senate as the GOP controls the chamber by just 52-48. The Senate law makers are planning to vote on their version of the tax bill when they return from Thanksgiving recess. Speaking to ABC's "This Week," Senator Susan Collins said that she had not reached a conclusion on voting to tax plan passed by the Senate Finance Committee on Thursday. Meanwhile, U.S. President Donald Trump would not insist on including repeal of the individual health care mandate in a bill intended to enact the biggest overhaul of the tax code since the 1980s, Office of Management and Budget Director Mick Mulvaney said Sunday. Sentiment faded amid a political impasse in Germany after preliminary coalition talks collapsed.

"It is a day of deep reflection on how to go forward in Germany," Chancellor Angela Merkel told reporters after her efforts to form a three-way coalition government have failed.

The minutes from the Fed's latest policy meeting are due Wednesday, while minutes from the European Central Bank's October meeting are due Thursday.

The greenback showed mixed performance in the Asian session. While the currency held steady against the franc and the pound, it fell against the yen. Against the euro, it rose.

The greenback weakened to 1.1809 against the euro, off its early 6-day high of 1.1722. If the greenback slides further, 1.19 is possibly seen as its next support level.

Data from Destatis showed that Germany's producer price inflation eased in October, in line with expectations.

The producer price index climbed 2.7 percent year-over-year in October, slower than the 3.1 percent rise in September.

The greenback dropped to 1.3279 against the pound, its lowest since November 2. Continuation of the greenback's downtrend may see it challenging support around the 1.34 area. The greenback edged down to 0.7574 against the aussie and 1.2755 against the loonie, from its early highs of 0.7550 and 1.2802, respectively. Further downtrend may see the greenback challenging support around 0.78 against the aussie and 1.26 against the loonie. The greenback weakened to 0.6840 against the kiwi and held steady thereafter. The greenback is seen finding support around the 0.695 region. On the flip side, the greenback bounced off to 0.9898 against the franc, from its prior low of 0.9879. The next possible resistance for the greenback is seen around the 1.00 area. The greenback held steady against the yen, after having dropped to a multi-week low of 111.89 early in the Asian session. The pair finished last week's trading at 112.09. Data from the Ministry of Finance showed that Japan recorded a merchandise trade surplus of 285.385 billion yen in October.

That was shy of expectations for a surplus of 330.0 billion yen and was down from 670.17 billion yen in September.

Looking ahead, the European Central Bank President Mario Draghi testifies on the economy and monetary policy before the European Parliament Economic and Monetary Affairs in Brussels at 9:00 am ET.

U.S. leading index for October is due in the New York session.