The euro backed off a nine-week high on Monday with sharp gains of the past two weeks on easing worries about eurozone debt inducing profit-taking, while more neutral market positioning may make its advance milder.
The euro held above key resistance around $1.3570 that it broke on Friday, a 50 percent retracement of its decline from November to early this month, as data showed speculators have closed all their bets against the currency.
Speculators turned long on the euro for the first time in two months in the week ended January 18 while doubling their bets against the greenback, figures from the Commodity Futures Trading Commission showed on Friday.
The euro fetched $1.3610, having briefly hit a fresh two-month high of $1.3648 in early Australasian trade on Monday, slightly below $1.3620 late in New York on Friday.
The currency piercing resistance around $1.3570 brings into view $1.3740, a 61.8 percent retracement of its decline from November to early this month.
Still, euro bears were wary of becoming too negative, having been badly burnt in the last couple of weeks. Against the yen, the single currency was at 112.50 yen, having hit a two-month high of 112.63 in choppy early trade and rising above its 200-day moving average for the first time in over a year.
Against the Swiss franc, the euro also held near Friday's 1-1/2-month high of 1.3068 franc, standing at 1.3041.
The common currency also hit a two-month high against the Australian dollar near A$1.38. "We'll be watching to see if this momentum remains in place. With periphery issues no longer fully offsetting the improving (at least in Germany) macro backdrop, watch the deck of euro zone PMIs due on Monday," said David Watt, strategist at RBC Capital Markets.
The euro's rebound has left the dollar languishing near two-month lows against a basket of major currencies. The dollar index last traded at 78.256, not far from a two-month low of 78.096 hit on Friday.
The dollar bought 82.75 yen, trapped in a range roughly between 81 yen and 84 yen seen so far this month. The Australian dollar slipped 0.2 percent to $0.9878, dented by lower-than-expected Australian producer prices.
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