The dollar was tightly traded near recent two-week lows against the euro and yen on Monday as investors awaited data this week that might fan expectations for the next Federal Reserve move to be an interest rate cut. The dollar came under broad pressure last week after the Philadelphia Fed report showed manufacturing activity in the mid-Atlantic region slumped to its weakest in more than three years. This week brings U.S. housing data, consumer confidence and the Personal Consumption Expenditure index -- the Fed's favourite measure of inflation. Softer-than-expected readings could reinforce expectations, still slim, that the Fed might cut interest rates as early as December. "The market has stabilised looking towards this afternoon's data -- if anything the housing market data is probably skewed towards the downside," Rabobank currency strategist Stuart Ritson said. He added however that the euro's recent surge against the dollar might well have run out of steam. "It wouldn't surprise me if the euro started to drift lower towards the low $1.27s." Initial euro gains against the dollar were clipped after data showed consumer inflation in the German state of Hesse fell -- taking a little froth off euro zone interest rate expectations. "There is some expectation that the ECB may move beyond 3.5 percent ... with these falling oil prices weighing on inflation, the market is probably just unwinding some of that rate hike expectation for 2007," said Kamal Sharma, currency strategist at Bank of America.