A surprisingly strong report on U.S. manufacturing gave a boost to the dollar.
The currency got a lift just days before the Federal Reserve is expected to launch a big bond-buying program to support the weak U.S. economy. Expectations for that announcement has been a major weight on the dollar in the past two months.
The currency had earlier Monday fallen to its latest 15-year low versus the yen.
Investors expect the Fed to decide at its meeting on Tuesday and Wednesday that it will begin buying large amounts of U.S. government debt. That should drive down interest rates and trigger more borrowing and spending, but it would also drag down the dollar.
Investors consider the Fed move a "fait accompli," said Win Thin, a currency analyst with Brown Brothers Harriman in New York. The Fed has been prodded to act by stubbornly high unemployment rates, and one positive manufacturing report isn't likely to change the central bank's stance. Still, the size and timeline of the Fed's program remains unknown, and an announcement Wednesday that falls below the market's expectations could give the dollar a small boost, Thin said.
"In order to keep the dollar weak, the Fed needs to meet the market's expectations of renewed U.S. Treasury purchases of $500-600 (billion) initially or $100 (billion) a month," wrote Mansoor Mohi-uddin, the head of foreign exchange strategy for UBS, in a research note over the weekend.
In late trading in New York, the euro fell to $1.3888 from $1.3897 late Friday. The euro receded from a level slightly above $1.40 in overnight trading. Still, the euro has risen more than 8 percent since late August, when Fed chief Ben Bernanke hinted that the Fed was ready to act further to support the economy.
The dollar also moved higher to 80.57 Japanese yen, recovering from its latest 15-year low of 80.25 yen in earlier trading. The yen is just shy of its highest point since World War II, reached on April 1995. Late Friday, the dollar was worth 80.49 yen.
The yen has continued to rise despite efforts to curb its gains. Japanese officials intervened in foreign exchange markets last month. The Japanese central bank cut interest rates to almost zero in October. Alongside dropping demand for the U.S. dollar, investors continued to push up the yen, putting pressure on Japan's big exporters and the country's fragile recovery from the recession.
A rising currency cuts into profits of goods sold overseas. It can also make a country's exports pricier compared to goods from countries with weaker currencies.
In other trading Monday, the British pound edged up to $1.6033 from $1.6021, while the dollar fell to 1.0177 Canadian dollars from 1.0203 Canadian dollars.
The U.S. currency rose to 0.9924 Swiss francs from 0.9855 Swiss francs, hitting its highest level versus the Swiss currency since late September.