Data released on Friday showed speculators once again taking a bullish stance on the dollar, increasing their bets in the week up to last Tuesday after cutting their long positions for the first time since October in the previous week.
The main data focus for the week will be Friday's U.S. non-farm payrolls report.
"This week's NFP figure is likely to confirm (the) assumption...that if theFOMC (Federal Open Market Committee) hopes to get at least two hikes in during the year, one of them should be out of the way by the middle of the year," wrote FXPrimus's head of investment research, Marshall Gittler.
A gun attack in Istanbul that killed 39 people was seen having little impact on the currency market, with the Japanese yen - traditionally used as a safe haven - falling against the dollar and the Turkish lira slipping only 0.3 percent.
"The market is unfortunately getting increasingly used to such events – it barely reacts to them anymore," said Commerzbank's Reichelt. "When we had that attack in Berlin recently, there was barely any move - the euro moved a few pips.
Sterling edged up 0.2 percent to $1.2347, close to a 10-day high of $1.2388 hit on Friday.