By Saikat Chatterjee
LONDON, June 27 (Reuters) - The U.S. dollar struggled versus its major rivals on Monday as traders reassessed the prospects of aggressive rate hikes, while the euro led gainers at the start of the European Central Bank's annual summit in Portugal.
Aggressive interest rate hike bets have boosted the dollar in recent days with an index rising to a near two-decade high of 105.79 earlier this month. But with some high-frequency data indicators showing growth momentum starting to cool, investors are turning bearish on the economy's prospects.
"The sharp rise in inflation expectations has resulted in consumer confidence falling to a record low which will reinforce fears over a sharper slowdown in the U.S. economy going forward," Mizuho strategists said in a note.
Against its rivals, the dollar edged 0.2% lower at 103.86. It hit a late 2002 high of 105.79 earlier this month.
Higher terminal pricing of benchmark interest rates has been a key support for the dollar but that source of strength has faded in recent days.
Futures pricing shows traders now anticipating the U.S. Federal Reserve's benchmark funds rate stabilising around 3.5% from March next year, a pullback from pricing in rates zooming to around 4% in 2023.
The euro led gainers versus the dollar as the European Central Bank's annual forum in Sintra got underway with ECB President Christine Lagarde and Federal Reserve Chair Jerome Powell both attending the meeting. Markets will be keenly watching for any signs of future policy moves.
The single currency was up 0.2% at $1.0580.
Notwithstanding the upbeat sentiment in global markets, commodity currencies came under pressure on Monday as data showed profits at China's industrial firms shrank again, albeit at a slower pace, in May after a sharp fall in April.
Elsewhere, Russia's rouble weakened in the interbank market as Russia headed for its first sovereign default since the Bolshevik revolution a century ago.
Cryptocurrencies solidified gains, with the world's biggest cryptocurrency Bitcoin up 1.4%, trading at $21,170.88 after falling as low as $17,588.88 earlier this month.
(Reporting by Saikat Chatterjee; Editing by Muralikumar Anantharaman)