Thin end-of-year volume on Monday exacerbated weakness in the U.S. dollar, which dipped for its third straight session as investors favored riskier assets.
The dollar index, which measures the currency against a basket of rivals, weakened 0.18% to 96.743 in North American trade. On Friday the index suffered its biggest one-day fall since March, which left its gains for the year around 0.6%, compared with a gain of about 4.4% in 2018.
"The dollar headed lower on the second-to-last trading day of the year... with ultra-thin liquidity conditions exacerbating foreign exchange moves," wrote analysts at Action Economics.
"Dollar weakness has been widespread through the session, leaving the dollar index near six-month lows. News that the 'Phase 1' U.S.-China trade deal will be signed this week has prompted some USD selling, as safe-haven flows are reversed into year-end."
The White House's trade adviser, Peter Navarro, on Monday said the U.S.-China Phase 1 trade deal would likely be signed in the next week, but said confirmation would come from President Donald Trump or the U.S. Trade Representative.
In an interview on Fox News, Navarro cited a report that Chinese Vice Premier Liu He would visit this week to sign the deal, but did not confirm it.
"Washington has sent an invitation and Beijing has accepted it," the South China Morning Post reported on Monday, quoting a source.
In addition to knocking the dollar, increased optimism about U.S.-China trade relations and an improved global growth outlook drove investors out of other safe-haven assets like U.S. Treasury bonds. The yield on the benchmark 10-year Treasury note was last up 2.2 basis points to 1.895%.
China's yuan strengthened to touch 6.974 in the offshore market, its highest since Dec. 13.
Investor appetite for risk also helped drive the euro to a 4-1/2-month high of $1.121 on Monday. It was last up 0.23% at $1.120. Signs that the euro zone economy has turned a corner have lifted the single currency in recent weeks.
Sterling was last trading 0.26% stronger against the dollar at $1.311.
Against the euro, the pound gave back early gains and was last up just 0.04% at 85.38 pence. Concerns that Britain is headed for a disruptive "hard Brexit" at the end of 2020 have hurt the pound since mid-December.