The euro scaled a three-weak peak against the dollar on Monday, on optimism about Greece's prospects after the government reshuffled its bailout negotiating team as the cash-strapped country seeks to avoid a default.
Greece looks set to run out of funds in the coming weeks.
On Monday, Greek Prime Minister Alexis Tsipras appointed Deputy Foreign Minister Euclid Tsakalotos, an economist well liked by officials representing creditors, as coordinator of the bailout negotiating team, giving him a more active role in the debt talks.
The change would sideline Finance Minister Yanis Varoufakis, who had been very active in the Greek negotiating team. The Varoufakis-led team came out empty-handed from Friday's meeting of the Eurogroup finance ministers in Riga.
"There was probably a view that Varoufakis was an obstacle to concessions on the Greece end," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "At the margin, this increases the hope for some positive developments from the Greece-EU debt negotiations."
The euro rose as high a $1.0925, the highest level since April 7. It was last up 0.1 percent at $1.0883.
Still, investors remained negative on the euro, with sizable short positions of 214,465 contracts last week, according to data from the Commodity Futures Trading Commission released on Friday.
"Fundamentally, the short position we have on the euro is based upon the economy, but we are more aggressively short the euro because of Greece and the geopolitical issues," said Thomas Clarke, portfolio manager on the William Blair Macro Allocation Fund in London.
The fund, which has about $1.5 billion in assets under management, said it has a 19 percent short position on the euro.
The dollar index fell 0.2 percent to 96.744, a three-week low.
Investors are bracing for the Federal Reserve's monetary policy meeting this week. The Fed's decision on Wednesday will help set the tone for the dollar in the near to medium term.
The dollar's searing rally since last summer had slowed following a run of poor U.S. economic numbers, including the softer-than-expected non-farm payrolls report for March. The data has cemented expectations for a more gradual pace of interest rate increases by the Fed.
The dollar was flat against the yen at 119.03 after trading higher for most of the day, as Fitch cut Japan's credit rating.