European session review: USD trades flat, as investors assess U.S Treasury Secretary Yellen's remarks while awaiting U.S. inflation data

USD was flat against its major rivals in the European session on Monday as investors assessed the comments of the U.S Treasury Secretary Janet Yellen, who said in an interview with Bloomberg News on Sunday that President Biden should push for $4 trillion in spending even if it results in higher inflation and that slightly higher interest rates "would actually be a plus" for the U.S. “We’ve been fighting inflation that’s too low and interest rates that are too low now for a decade,” she noted, adding that “we want them to go back to” a normal interest rate environment, “and if this helps a little bit to alleviate things then that’s not a bad thing - that’s a good thing.” Yellen also said that any “spurt” in prices resulting from the stimulus package is expected to fade away in 2022. 

Market participants are now looking for Thursday's report on the U.S. May consumer price index (CPI) for further signs of inflation risks. The Federal Reserve's policymakers have continued to reassure that any jumps in inflation as the U.S. economy rebounds from the COVID-19 pandemic will be transitory. Economists forecast the headline CPI rose 4.7% y/y in May, following a 4.2% climb in the previous month, which was the highest in nearly 13 years. It is believed that hot inflation data could cause the Fed to step back from its ultra-loose policies.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, edged up 0.02% to 90.15.