The dollar was largely unchanged Monday, weighed down by expectations the Federal Reserve will keep U.S. interest rates steady this year while other central banks tighten monetary policy.
Analysts said Friday's surprisingly strong U.S. jobs report was not enough to reverse the recent trend of narrowing the interest rate advantage for the dollar over major European currencies, which has been eroding demand for the greenback.
"Expectations that the dollar's yield appeal will deteriorate over the coming months continue to weigh on the dollar," said Omer Esiner, market analyst at Ruesch International in Washington.
"The dollar remains biased to the downside as a result of the outlook that U.S. interest rates will remain steady for the remainder this year, which contrasts with rate hike expectations in Canada, the euro zone, U.K., and Japan," he added.
The euro was flat at against the dollar, within striking distance of its record peak above $1.3680 struck in April.
The U.S. dollar's sluggishness was most apparent against the Canadian dollar, which hit a 30-year peak against the greenback at C$1.0442 amid widespread expectations the Bank of Canada will raise rates a quarter point to 4.5% on Tuesday.
The dollar was flat against the yen.
The euro rose to a record peak against the yen at around 168.54 yen according to Reuters data, before trading back down.
The yen also dropped to its lowest in more than a decade versus sterling and the Australian dollar .
But it recovered most of these losses after Japanese vice finance minister, Hideto Fujii, said the economy was firm, something that should be reflected in exchange rates.
Still, investors' appetite for 'carry' -- selling low-yielding currencies for higher-yielding units -- is likely to prevent a strong rebound in the yen, analysts say.
Absent a heavy slew of major U.S. economic data this week, the Bank of Canada rate decision and statement could take on more significance for currency markets than it otherwise might.
High oil prices and steady growth are expected to keep the European Central Bank on a tightening path, while the Bank of Japan will likely lag all other central banks bar the Fed, even if it does hike rates from 0.5% some time this year.
"Carry trades will continue. From an interest rate perspective and from a capital flow perspective, there are good reasons for the yen to remain weak," said Johan Javeus, FX strategist at SEB Merchant Banking in Stockholm.