- The dollar index, which measures the greenback against a basket of six currencies, was 0.1% higher at 92.267.
- The index remains close to a 3-month high of 92.844 touched last week.
The dollar edged higher across the board on Monday as concerns about the pandemic encouraged investors to seek a safe haven, and as they awaited more clues about the global economic recovery.
With markets hyper-sensitive to any talk of early tapering, U.S. inflation data on Tuesday will be closely watched ahead of testimony by Federal Reserve Chair Jerome Powell on Wednesday and Thursday.
"Market caution reigned at the start of the week, weighing on risk sentiment and boosting the U.S. dollar," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
Reports from around the globe of surging infections of the Delta coronavirus variant also hurt investors' appetite for riskier assets.
Investors will look to U.S. inflation data on Tuesday and Federal Reserve Chair Jerome Powell's economic testimony on Wednesday and Thursday as they gauge expectations for the Fed to dial back on stimulus as soon as this year, Manimbo said.
Any signs that inflation could be more persistent than previously thought could fan expectations that the Fed may exit from current pandemic-era stimulus earlier, supporting the dollar against other major currencies.
Conversely, more benign data could lead investors to think the U.S. central bank can afford to maintain an easy policy framework for longer, encouraging more bets on risk assets, including risk-sensitive currencies.
The dollar index, which measures the greenback against a basket of six currencies, was 0.1% higher at 92.267. The index remains close to a 3-month high of 92.844 touched last week.
The Australian dollar, often viewed as a liquid proxy for risk, was 0.16% lower on the day.
Sterling fell, as British Prime Minister Boris Johnson was expected to confirm plans to remove nearly all remaining COVID-19 restrictions in England from July 19, despite a surge of cases to levels unseen for months.
The pound was 0.24% lower at $1.3875.
Meanwhile, the People's Bank of China (PBOC) said China would cut the amount of cash that banks must hold as reserves, releasing around 1 trillion yuan ($150 billion) in long-term liquidity to underpin a post-COVID economic recovery that is starting to lose momentum. [nL1N2ON02M]
"While welcome, the move also signals that the authorities are concerned about China's growth prospects, so it's mixed news," said Marshall Gittler, head of investment research at BDSwiss Holding.
The Canadian dollar was trading about 0.4% lower at 1.2492 to the greenback, or 80.05 U.S. cents.
Investors are looking to a rate announcement from the Bank of Canada's on Wednesday to see whether the bank will announce any slowing of its asset purchases.
Cryptocurrencies were on the defensive with bitcoin down about 2.2% at $33,523.11 and ether down 1.7% at $2,102.63.