The U.S. dollar lost ground against its major counterparts in the European session on Monday, as investors bet on a slower pace of policy tightening by the Federal Reserve in the wake of a lower than expected wage growth in December.

Slower than expected wage growth prompted traders to scale back bets on interest rate increases anticipated for 2023.

Fed fund futures are now pricing in a 78 percent chance of a 25 basis point rate hike at the next meeting.

Investors await Fed Chairman Jerome Powell's speech at a central banking conference in Sweden due on Tuesday.

All eyes are on U.S. inflation data due on Thursday. Economists expect inflation to slow to 6.5 percent in December, from 7.1 percent in November.

The greenback fell to a 5-day low of 131.31 against the yen and a 10-month low of 0.9188 against the franc, off its early highs of 132.66 and 0.9292, respectively. The greenback is seen finding support around 117.00 against the yen and 0.88 against the franc.

The greenback dropped to near a 4-week low of 1.0732 against the euro and near a 3-week low of 1.2188 against the pound, reversing from its early highs of 1.2079 and 1.2079, respectively. The greenback is likely to face support around 1.11 against the euro and 1.23 against the pound.

The greenback depreciated to a 1-1/2-month low of 1.3357 against the loonie, more than 4-month low of 0.6947 against the aussie and near a 4-week low of 0.6412 against the kiwi, after rising to 1.3444, 0.6874 and 0.6328, respectively in early deals. The greenback is poised to challenge support around 1.29 against the loonie, 0.72 against the aussie and 0.66 against the kiwi.

U.S. consumer credit for November will be featured in the New York session.

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