The dollar rose to its highest in five months against the euro on Monday, bolstered by recent upbeat US data after a weekend Group of Seven meeting put no obstacles in its recovery path.
Already nursing losses from the previous week, the euro fell towards $1.1760 - its lowest since November - before a better than expected German business sentiment survey allowed it to recover its footing.
The communiqué issued by G7 finance ministers and central bankers on Saturday repeated the language used at the end of their previous meeting in February, allowing investors to concentrate on the prospect of higher US interest rates.
"The big picture is that interest rates in the US are going to rise," said Aziz McMahon, currency strategist at ABN Amro. "The euro is a defensive currency and is suffering in a positive growth trend."
The dollar, already on a roll after robust US durable goods data on Friday, extended gains to a five-month high of 1.3225 Swiss francs before returning to stand little changed on the day.
A monthly survey by Germany's Ifo institute showed business morale in Europe's biggest economy unexpectedly rose in April, helped by recovering confidence among retailers and manufacturers.
But the survey also showed companies' expectations for the future fell this month to their lowest level since August 2003.
After the G7 meeting, ECB President Jean-Claude Trichet repeated his well-rehearsed line that the central bank had no policy bias and that all options were open on interest rates.
But a European Union source said German and French Finance Ministers Hans Eichel and Nicolas Sarkozy had urged the ECB at the G7 meeting to cut rates to boost growth.
"The conflict between the ECB and euro zone finance ministers is a small negative (for the euro)," said Adam Cole, senior currency strategist at Credit Agricole Indosuez in London.
Investors are betting interest rate differentials between the euro zone and United States will narrow by the end of the year, as the Federal Reserve moves to prevent a fast-growing US economy from overheating.
The dollar eased off recent peaks against the yen as upbeat growth expectations and a strong stock market performance offered the Japanese currency some support. The dollar stood at 108.85 yen in the European mid-session, down around a yen from five-week highs scaled at the end of last week.