The euro fell to a seven-week low against the dollar on Monday on a spat between Italy and the European Union over Rome's budget plans, while the yuan weakened as Beijing's move to spur more lending failed to ease concern about economic growth.
Sterling retreated as traders booked profits on recent gains tied to optimism about a Brexit deal. Nervous investors piled more money into the dollar, as speculators' bullish bets in the greenback grew to their highest level since December 2016 last week.
On Monday, Italian 10-year bond yield increased nearly 20 basis points to 3.60 percent, the highest level in 4-1/2 years, while the country's stock market fell to its weakest since April 2017.
"The confrontation is set to escalate, and this is hurting Italian assets," Marc Chandler, chief market strategist at Bannockburn Global Forex in New York said of the tension between Italy and the regional economic bloc.
Italian Deputy Prime Minister Matteo Salvini, speaking at a media conference with French far-right leader Marine Le Pen, denounced European Commission President Jean-Claude Juncker and Economics Commissioner Pierre Moscovici as enemies of Europe.
The single currency fell 0.3 percent against the dollar to $1.149 and not far from a more-than one-year low of $1.1355 hit in mid-August. The euro fell 0.2 percent to 1.1406 Swiss franc, and shed 0.8 percent against 130.02 yen.