That reading of the core PCE, which is the Fed's preferred inflation measure, fell short of the central bank's 2 percent target. In addition, the Institute for Supply Management (ISM) said its index of national factory activity dropped to a reading of 54.8 last month, the weakest reading since December.
While the dollar initially fell against the yen and euro after the data, it recovered to hit a one-month high against the yen of 111.92 yen and pared most of its losses against the euro. "I don't think this data by itself will derail a June hike," said Vassili Serebriakov, FX strategist at Credit Agricole in New York. "I think markets are kind of treating (first quarter) data as old news" in part since markets had already digested last week's release of first-quarter US gross domestic product growth data, he added.
Trading was thin as several markets across Asia and Europe were closed for the May Day holiday. The euro was last up just 0.1 percent against the dollar at $1.0901, after touching a session high of $1.0923 shortly after the data. That session peak remained below last week's 5-1/2-month high of $1.0950. The dollar was last 0.2 percent higher against the yen at 111.77 yen and near a one-month high of 111.92 touched earlier in the afternoon.
The Fed would likely label Monday's weak US economic data as "transitory" in the central bank's Wednesday policy statement, said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York. He said, however, that a continuation of weak US economic data could influence the Fed's economic outlook. The dollar index, which measures the greenback against a basket of six major rivals, was last up 0.05 percent at 99.101.
Copyright Reuters, 2017