The dollar rose on Monday amid anticipation of improved U.S. sales data which could hasten moves by the country's central bank to wind down its stimulus programme.
The euro slipped against the dollar, vulnerable to re-emerging worries about both core and peripheral euro zone economies.
Gains in the U.S. currency were muted, however: market participants refrained from aggressively betting on further dollar strength ahead of Fed chief Ben Bernanke's congressional testimony on July 17-18, which will be closely watched for more clarity on the central bank's stimulus-easing plans.
The dollar was up 0.3 percent on the day against the basket of currency at 83.189, recovering from last week's low of 82.418. Support was at its 100-day moving average around 82.665. The greenback could take further cues from U.S. retail sales data due at 1230 GMT.
"The Fed has maintained (that tapering stimulus) is data dependent and so retail sales data today is key," said Paul Robson, currency strategist at RBS. "We still buy into the idea of relative outperformance of the U.S. economy and that support's the dollar. But I don't think we will get another kicker higher on retail sales or on Bernanke's testimony."
The dollar was sent reeling last week after Bernanke said a highly accommodative monetary policy would be needed for the foreseeable future.
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Much of the market, however, remains bullish on the dollar over the long term since, in contrast to prospects of the Fed tightening policy, the European Central Bank, the Bank of England and the Bank of Japan all look set to ease policy.
Data showed the value of net long positions in the U.S. dollar rose to $27.94 billion in the week ended July 9.
The dollar rose 0.6 percent to 99.78 yen, with support cited at the base of the Ichimoku cloud at 98.15 yen.
Against the dollar, the euro was down 0.3 percent at $1.3032 with Friday's lows of $1.2999 was acting as support.
The single currency has managed to stay around the $1.30 mark in recent sessions.
With German exports falling the most since late 2009, France losing the last of its top notch AAA credit ratings and Portugal seeing a spike in its bond yields after political wrangling over its austerity measures, the euro's outlook remained fragile.
Also, a slowdown in China's economic growth could hurt the euro as "major exporters in Europe have put increasing emphasis on Asia and China in recent years, especially following the problems in the periphery", analysts at Morgan Stanley said.