By Noreen Burke

Investing.com - The dollar remained on the back foot on Thursday, weighed down by a combination of expectations for even more monetary easing by the Federal Reserve and very low U.S. yields.

The U.S. dollar index was down 0.27% at 97.04 by 04:53 AM ET (953GMT). The index has shed most of its gains for the year over the last few days, as expectations grew that the Fed would cut rates again in order to stave off the economic fallout from the spreading coronavirus outbreak.

The Fed delivered a 50-basis point emergency rate cut on Tuesday, with many traders expecting at least two more such moves in coming months.

Bets that the Fed could cut rates again at its upcoming meeting in March continued to pressure U.S. government bond yields. The yield on the benchmark 10-year U.S. Treasury note was holding at 1.0% after falling to a record low on Tuesday.

The dollar hit fresh five-month lows against the yen at 106.97, while the euro was higher against the greenback at 1.1170, not far from a two month high reached earlier in the week.

The dollar had found some support in the previous session after data showing that the U.S. economy was in good shape to face the risks from the virus, with services sector activity jumping to a one-year high in February, while private payrolls gained 183,000.

But while U.S. policy rates, which stand at a target range of 1.00% to 1.25%, have more room to fall, many rates in Europe and Japan are already below zero and monetary authorities there are hesitant to lower them much further.

Meanwhile, the British pound held overnight gains after the incoming Bank of England governor said he would wait for more clarity about the virus before moving interest rates, rather than rushing to an emergency cut.

The pound was last at 1.2906 against the dollar and traded at 0.8641 against the euro.

--Reuters contributed to this report

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