The dollar index was last trading down nearly 0.1 percent at 80.11.
The dollar recovered some of its losses after U.S. Federal Reserve Governor Daniel Tarullo, the U.S. central bank's point person on financial supervision, said a tightening of monetary policy cannot be "taken off the table" in light of risks to financial stability.
Tarullo's comments suggested the Fed could raise interest rates, which would be positive for the dollar. The central bank has kept interest rates at near-zero levels for more than five years to help the economy recover from recession.
The dollar was down against the euro, which last traded up about 0.1 percent above $1.37. The dollar was also down almost 0.3 percent against the Japanese yen to trade at 102.2.
The euro gained after the closely watched German Ifo survey beat expectations on Monday. The gains against the dollar came despite new European Commission forecasts which predicted 1 percent inflation this year and 1.3 percent in 2015, well short of the European Central Bank's target of just below 2 percent.
In a week lacking major economic data, all eyes will be on Friday's first estimate of euro zone February inflation. Recent months' numbers have seen price growth sliding below 1 percent, strengthening the case for more action by the European Central Bank to promote growth.
The Australian dollar, meanwhile, was down after a fall in China's yuan currency, which reflected concern over growth and moves by the People's Bank of China (PBOC) to prod the currency lower.
The Aussie is the nearest developed world currency to a proxy for growth in China, which takes much of Australia's commodities output.
The Australian dollar was down 0.08 percent at US$0.90, although it was still some way above January's three-and-a-half-year low just below $0.87.
Meanwhile, the Norwegian crown hit a fresh three-month high of almost 8.27 crowns per euro, in largely subdued trading in major currencies.
That extended Monday's gains after German drug firm Bayer's $2.9 billion deal to buy Norwegian cancer drug maker Algeta. The euro was last trading 0.09 percent lower at 8.2975 crowns per euro.
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