The dollar rallied broadly on Monday after a statement by the Group of Seven richest nations late Friday brought no surprises, allowing some optimism about US economic prospects to bolster the currency.
Attention was shifting to the big US data event of the week, Friday's release of September's non-farm payrolls report, for a signal on the state of the labour market, one key indicator of the strength of the US economy.
With a chorus of Federal Reserve officials speaking this week, traders were also looking to Fed Chairman Alan Greenspan - who is slated to speak on Tuesday and Thursday - for his latest views on the economy and any clues on monetary policy.
In a statement after a regular meeting, the G7 countries reiterated a call for more "flexibility" in the exchange rates of major economies, which many analysts saw as a reference to China, whose yuan currency is pegged to the dollar.
However, it made no direct reference to China, relieving dollar bulls who had feared a strong G7 position on China could cause Asian currencies to appreciate against the dollar.
Yet some traders were sceptical that the dollar's rally would sustain enough momentum to lift the currency out of its summer trading ranges.
Many analysts saw the dollar's relief rally as fleeting.
"I would say that three-quarters of (the dollar's) move is related to a market that expected something different out of the G7 and is now retracing in the aftermath," said Jeremy Fand, senior proprietary trader with WestLB in New York.
Trading in the same "big quiet range" will continue until at least the November 2 US presidential election, said Ronald Simpson, managing director of global currency analysis at Action Economics, a research firm in New York.
Late on Monday in New York, the euro was trading around $1.2283 according to Reuters data, down about 1.0 percent on the day.
Against the yen, the dollar was up 0.4 percent to 110.93 yen. The Swiss franc, the dollar climbed 1.1 percent to 1.2642 francs. Sterling fell 0.9 percent to $1.7835.
"Payrolls are now the dominant event on the horizon," in the currency market, said Joe Francomano, vice president of foreign exchange at Erste Bank in New York.
Economists' median estimates are for creation of 148,000 non-farm payrolls jobs in September and for a jobless rate at 5.4 percent. Just how strong or weak relative to expectations the number is will affect currency investors' expectations for Fed rate hikes and, by extension, the dollar.
Among US data on Monday, currencies reacted little to a report on US factory orders. Orders edged down 0.1 percent in August compared with an upwardly revised 1.7 percent in July. Economists had expected a 0.1 percent increase in August.
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