NEW YORK (CNN/Money) - The dollar hovered near four-year lows against the euro Monday after Treasury Secretary John Snow called the dollar's recent weakness "a modest realignment" at a weekend meeting of the Group of Seven industrial nations.

Meanwhile, Treasury yields pulled away from near-historic lows, as bond prices fell.

At around 3:45 p.m. ET, the euro bought $1.1659, after hitting $1.168 earlier in the day. The dollar bought ¥117.36 versus ¥115.63 late afternoon Friday. A trader told Reuters the jump in the dollar versus the yen was the result of some "panic buying" following Snow's comments.

At the G7 conference in France during the weekend, Snow said he didn't see problems with the dollar's recent weakness. He also said the strength of the dollar would not be based on its value relative to other currencies, but rather on the public's confidence in the currency and its resistance to counterfeiting.

The dollar has been weakening against other major currencies in recent weeks, and U.S. officials, as well as those in Europe, have not appeared concerned with its falling valuation. There have been reports, however, that the Bank of Japan has been buying up the dollar to slow its decline versus the Japanese yen.

"Markets took Snow's comments to mean the U.S. was comfortable with a weaker currency and gave the commodity currencies another push higher," James Shugg, international economist at Westpac, told Reuters. "It's just another step in the process of U.S. dollar depreciation which began in February last year and may have another year to go."

Treasurys also retreated and yields moved somewhat higher. The benchmark 10-year note shed 9/32 of a point in price to 101-14/32, lowering its yield to 3.45 percent, up modestly from 3.43 percent late Friday afternoon. The 30-year bond fell 27/32 of a point in price to 114-12/32 for a yield of 4.47 percent, rising slightly from 4.43 percent late afternoon Friday.

The five-year note lost 3/32 of a point in price to 101-1/32, yielding 2.40 percent, while the two-year note slid 11/32 of a point in price to 100-18/32, yielding 1.34 percent. Yields and prices move in opposite directions.

The main event for the week is expected to be Fed Chairman Alan Greenspan's testimony on the economy and monetary policy before the Joint Economic Committee of Congress on Wednesday.

"Greenspan holds the key here to the price action in the second half of the week," said Karydakis. "There's not much room for surprises given the (Federal Open Market Committee) statement two weeks ago, but he'll probably be a little more expansive on the essence of the statement."

Bond prices have soared in recent weeks as traders speculate as to whether the Fed will cut rates again in June. At policy makers' last meeting, the left the Fed fund rate alone, at 1.25 percent, but implemented a bias towards economic weakness.

Traders have also been talking about the possibility of the Fed getting involved in buying up bonds to help counter deflationary pressures. Deflation occurs when prices fall uncontrollably, hurting corporate profits and leading to an economic slowdown.  

-- from staff and wire reports