Dollar rally takes a breather as commodities rise

U.S. dollar slipped against the yen and a basket of currencies on Monday, weighed down by a recovery in oil prices which gave investors the opportunity to take profits on the greenback's recent sharp rally.

But the dollar's losses were limited by the rise in U.S. stock futures as oil prices slipped and geopolitical tensions eased after Pakistan's beleaguered President Pervez Musharraf announced his resignation on Monday. The uncertainty over Musharraf had earlier raised concern in the United States and among its other allies that the issue was distracting from efforts to control violent militants in the nuclear-armed nation.

The dollar has come off because investors have realized that it has moved too far, too fast. At some point you would expect a pause," said David Watt, senior currency strategist, at RBC Capital Markets in Toronto.