The dollar gained ground against the euro in late trade Monday to reverse early losses, as a new reading of German business confidence dropped for the fourth straight month.
After rising as high as $1.2535, at 2100 GMT the euro was at $1.2497, down from $1.2512 late Friday.
The dollar also picked up ground on the yen, trading to 78.74 yen from 78.67 yen, while the euro slipped to 98.41 yen from 98.43.
In Germany, the Ifo measure of business confidence fell for the fourth consecutive month as Europe's biggest economy shows more signs of wear and tear from the eurozone crisis.
"The German economy is continuing to falter," Ifo president Hans-Werner Sinn noted, as "companies expressed greater pessimism regarding future business developments."
The dollar's modest strength also came from a drift in market sentiment against the expectation that Federal Reserve Chairman Ben Bernanke will signal more interest rate-depressing stimulus for the economy in a much-awaited speech at the end of the week, said Neal Gilbert of forex specialists GFT.
"Today appeared to be a victory for those who say it (the stimulus) won't be implemented as the US dollar gained virtually across the board, and equity markets dropped slightly," said Gilbert.
"However, the movements were not significant and may signal the resilience of those on the other side of the fence."
The British pound slipped against the dollar to $1.5792 from $1.5803; the dollar rose to 0.9609 Swiss francs from 0.9595 francs.