The dollar rose to three-and-a-half week highs against the euro today but it later retreated as nervousness ahead of this week's key US jobs report tempered the gains it had made on the back of Friday's firm data.
The greenback rose almost one per centagainst the euro on Friday after data showed US consumer confidence rose more than expected in August, while economic growth in the second quarter was in line with expectations.
However, trade was thin with London markets closed and dealers said the dollar could find further gains difficult to achieve ahead of Friday's crucial US payrolls, especially after the previous report in early August proved a disappointment.
The euro slipped below $1.20 for the first time since August 4th in early trade but managed to recover its footing to stand a touch firmer at $1.2025.
The dollar was half a per cent higher against the yen at 110.20 yen as the Japanese currency slipped back after recent outperformance.
Ahead of the jobs data, traders will be taking a look at US personal income and consumption data for July due later today and a host of indicators later in the week, including the Conference Board's index of consumer confidence, due tomorrow.
The GDP and consumer data kept alive expectations of a continued "measured" monetary tightening by the Fed, and traders were now focusing on non-farm payrolls for August.
Now, the outcome of this week's jobs report could be crucial in determining whether the Federal Reserve raises interest rates in September for the third time since June.
Analysts reckon the US economy generated 150,000 new jobs in August, higher than the disappointing rate of job creation seen in the previous two months.