The euro retreated to a 10-day low against the dollar on Monday, as investors eyed a European Central Bank meeting later in the week that could pave the way for further stimulus to boost inflation in the euro zone.
Though most traders and analysts reckon the ECB will wait until its December meeting to announce anything new, they see a risk that additional easing measures could be flagged this Thursday and are betting ECB chief Mario Draghi will at least try to talk the currency down.
"Any dovish shift in the ECB's language will be seen as increasing the odds of more stimulus and likely send the euro broadly lower," said Omer Esiner, chief market analyst, at Commonwealth Foreign Exchange in Washington.
The dollar has also been supported by some positive U.S. economic data last week such as the higher-than-expected consumer inflation and a four-decade low for initial weekly jobless claims. These reports gave some hope the Federal Reserve may actually raise interest rates this year, underpinning the U.S. currency.