The dollar slipped against the yen and the euro today to end last week's rebound as traders grew nervous ahead of US deficits data due later in the week.
Still, dollar bulls harboured hopes the currency would find a firmer footing if the Federal Reserve raises interest rates - as widely expected - at its policy meeting tomorrow, which would boost the attraction of dollar deposits.
"The dollar could move in any direction this week," said Mr Toshihiro Azuma, a forex manager at Sumitomo Trust and Banking. "It will be an important week for the dollar, whichever direction it goes."
At 7.25 a.m., the euro traded at $1.3255, above late New York levels on Friday and up more than a full cent from Friday's two-week low of 1.3139. It rose as high as $1.3289 in Asian trade.
The dollar was at around 104.95 yen, compared with 105.21 in late US trade and a one-month high of 106.20 hit late on Friday.
The dollar has gained around 3 per cent from its five-year low of 101.83 yen hit more than a week ago, and was up about 1.5 per cent from a record low $1.3470 per euro hit last week as traders closed positions ahead of the year-end holidays.
Still, worries about the ability of the United States to fund its current account deficit haunted the dollar as the market braced for US trade figures due on Tuesday and the current account report on Thursday.
The US trade gap is seen swelling to $53.0 billion in October from $51.56 billion the prior month. Data for the current account in the third quarter are forecast to show a $170 billion deficit versus a $166.18 billion shortfall in the second quarter.
Any renewed worries about the deficits widening further could put the dollar under more pressure, especially if there were not enough capital inflows to cover them.