The euro rose to a two-week high against the dollar on Monday, aided by higher money market rates and expectations inflation in the euro zone will tick up and ease pressure on the European Central Bank to loosen monetary policy.
Sterling soared to a 4-1/2-year high against the dollar, boosted by robust data and expectations of merger and acquisition inflows, after Pfizer confirmed it had made a bid approach to Britain's No. 2 drugmaker, AstraZeneca.
But most are unlikely to take aggressive positions before major events in the United States and the euro zone. Policy reviews by the U.S. Federal Reserve and Bank of Japan (BoJ) will also keep the market cautious in a holiday-shortened week. Many centers in Europe and Asia will be shut on Thursday for Labor Day. Japanese markets will be closed on Tuesday.