The greenback had earlier taken in stride news that North Korea had launched a missile on Tuesday, which Tokyo said appeared to have landed in its Exclusive Economic Zone (EEZ). But it took a dip after Pyongyang later said it would make a major announcement later in the day.
The dollar index against a basket of six major currencies was a shade lower at 96.178 after rising 0.6 percent overnight as a stronger-than-expected rise in the June Institute of Supply Management (ISM) national factory activity index propelled the 10-year Treasury yield to its highest since May 16.
Monday's developments helped the dollar index bounce back from a 9-month low of 95.470 plumbed on Friday.
The greenback was hit hard last week as expectations increased that central banks in Europe and Canada would eventually shift to tighter monetary policy.
"The dollar's latest rise is driven by direct demand, as opposed to the U.S. currency gaining thanks to the weakness of its peers," said Shin Kadota, a senior strategist at Barclays in Tokyo.