The primary source of investor concern is the value of the delta coronavirus variant which is set to weigh on European manufacturing survey data due shortly.
The European PMI data is expected to show the softening trend in Chinese PMIs, keeping in line with the strengthening trend in U.S. PMIs, given that the strong recovery seen over the June quarter is now in danger of fading as a combination of rising prices, ongoing supply chain strains and labour shortages take their toll on business activity.
And while the surge in the delta variant is likely to boost the safe-haven appeal of the US dollar, it might also derail the Fed's plans to taper its pandemic-era stimulus plan at the end of the year, according to some analysts.
Fed Chair Jerome Powell, which has thus far played down the repercussions, will speak at the conference of the central bank in Aug. 26 - 28 Jackson Hole, which will be carefully parsed by traders eager for details of the timing and pace of monetary policy tightening.
Risk off is set to keep the dollar underpinned and while a cautious Fed should diminish the extent of dollar gains, some adjustment in our year-end FX forecasts to show less dollar depreciation will be required given COVID risks picked up, MUFG strategists said in a note.
The dollar index, measuring its performance against main rivals, edged 0.1% lower at 93.638 but was within striking distance of an early November high of 93.734 hit on Friday.
The index climbed nearly 1% last week, despite remarks by Dallas Federal Reserve President Robert Kaplan, a well-known hawk who said on Friday that he might reconsider the need for an early start to tapering if the virus harms the economy.
Canadian Dollar gained losses against the U.S. currency following Prime Minister Scott Morrison said Australians must learn to live with COVID -19 when higher vaccination targets are reached.
The New Zealand dollar was low to $0.68385, close to the low of $0.6807 reached Friday, with the nation under lockdown as it struggles to contain a Delta outbreak.
The euro strengthened 0.1% to $1.1711, off Friday's 9-1 2 month trough of $1.1664.
Bitcoin topped $50,000 for the first time since mid-May and then traded at $50,333. 24.2% higher than bitcoin.