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By Bloomberg

A gauge of the dollar fell, extending its biggest weekly drop since 2011 that was sparked by the Federal Reserve’s decision to cut its projections for interest rates, inflation and growth.

The greenback is paring its ninth month of gains as investors seek clues on the timing of the Fed’s first interest- rate increase after leaving the benchmark near zero since 2008. Several Fed officials including voting member San Francisco Fed President John Williams will speak on Monday. The Aussie rose as much as 0.8 percent after data released Friday showed bets against the currency dropped by the most on record.

“Investors are feeling that as the recent Fed points towards a much later lift-off, we just continue to progress in the right direction but not as fast,” said Stan Shamu, a markets strategist at IG Ltd. in Melbourne. Investors will “remain cautious on the U.S. dollar in the short term. It looks like the dollar is capped.”

The Bloomberg Dollar Spot Index fell 0.1 percent to 1,194.46 at 2:58 p.m. in Tokyo after tumbling 2.2 percent last week. The weekly decline was the biggest since October 2011.

The dollar was little changed at $1.0810 against the euro, after slumping 3 percent last week. It weakened 0.1 percent to 119.93 yen.

Fed policy makers on March 18 lowered their median 2015 forecast for the federal funds rate to 0.625 percent from 1.125 percent three months ago. The stronger greenback contributed to weaker exports that would be a “notable drag” on growth this year, Fed Chair Janet Yellen said.

Dollar Bulls

Hedge funds trimmed their bullish dollar futures positions to the least since December, according to Commodity Futures Trading Commission data. Net futures position betting on a stronger greenback versus eight major peers in this category reached a record 448,675 contracts in January.

Cleveland Fed President Loretta Mester, a non-voting member this year, is also scheduled to speak on Monday.

“We want some hints on when the U.S. interest rate will rise, keeping our eyes on Fed officials’ comments as the effect of last week’s Fed statement still linger,” said Takuya Kawabata, an analyst at Tokyo-based Gaitame.com Research Institute Ltd.

Yellen also told reporters after the Federal Open Market Committee meeting that while the strong dollar has weighed on consumer prices, contributing to weak export growth and low import prices, it also reflects strength in the U.S. economy.

‘Constraining Factors’

“The outlook for a strong dollar is wavering, after Yellen noted constraining factors,” said Atsushi Hirano, head of Japan foreign-exchange sales at Royal Bank of Scotland. “Markets are split between views that the dollar will resume is climb and that a strong dollar is at a turning point. Forex moves are becoming more volatile.”

The dollar has gained 19 percent in the past year, the best performance among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro declined 9.2 percent, while the yen has dropped 0.3 percent.

The Australian dollar gained 0.5 percent to 78.12 U.S. cents.

Speculators and large hedge funds more than halved bets that the Australian dollar would weaken, according to CFTC data for the week ended March 17. The short positions shrank to 28,807 from 76,851.

“Everybody had been a little bit heavy expecting this March rate cut and that didn’t come to fruition,” Shamu said referring to market expectations for the Reserve Bank of Australia to lower interest rates as early as March, which have now been pushed back to May.

“At higher levels, the smart money will still be looking to sell the Aussie,” he said.