Dollar cuts Easter holiday losses; euro near $1.08

US-dollars being counted at the Korea Exchange bank.
Chung Sung-Jun | Getty Images
US-dollars being counted at the Korea Exchange bank.

The dollar cut earlier losses against most major currencies after feeling the carry-over effects of a disappointing U.S. jobs report from Friday that throws into question the timing for a U.S. interest rate increase.

The dollar index was last up about 0.6 percent at 97.13, while the euro briefly hit a session low of $1.089 against the greenback. The euro zone common currency last traded at $1.0926, up 0.3 percent.

Expectations the U.S. Federal Reserve will raise interest rates sometime later this year has fueled the dollar's rally since mid-2014. Higher U.S. interest rates will put dollar-denominated assets at a yield advantage versus other currencies such as the euro and yen where interest rates are being kept low.

Friday's closely watched employment data showed U.S. non-farm payrolls rose by 126,000 in March, the smallest gain since December 2013 and well under the 245,000 economists had forecast. On the brighter side, average hourly earnings increased 0.3 percent.

European markets remained closed on Monday for the Easter holiday, limiting trading volumes.

"The market is underweight dollars and looking for opportunities to buy dollars because even with the weak NFP number last month I really don't think that is going to change the trend for the dollar, which is buy on dips," said Lane Newman, director of foreign exchange for ING Capital Markets in New York.

"The euro had a couple of looks at the $1.1040/50 area and been rejected a number of times. My suspicion is that will cap it at the $1.10 handle. People are generally looking to sell euros," he said.

Read MoreDespite poor jobs data, dollar bulls keep the faith

The dollar gained 0.5 percent against the yen at 119.57 yen.

"We still see the dollar trending higher in the longer term. The jobs data headline was certainly soft, but we have to consider that jobs had been roughly growing at a pace of 200,000 a month for a year. The rise in earnings was also a plus," said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo.

The greenback traded flat against the Canadian dollar at C$1.2490, near the bottom of its C$1.24 to C$1.28 range that has been in place since the end of January. The pause in the buying of the U.S. dollar against the Canadian dollar is providing a good opportunity to pick up the greenback, says one strategist.

"At these levels dollar/CAD is a buy," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.