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The dollar strengthened against a basket of currencies in overnight trading on Monday but slipped in early London trading, as investors adjusted their expectations for an economic recovery after Friday's US employment data saw markets rally.
A recovery in US employment data lifted hopes of a quicker global economic revival on Friday, but in Europe on Monday the rally in stocks paused as investors turned cautious again.
New Zealand said on Monday that it has eliminated transmission of the coronavirus domestically and will lift all containment measures except for border controls, making it one of the first countries to do so.
The riskier New Zealand dollar rose to its highest in more than four months in overnight trading as the Asian session caught up with Friday's rally, and the Australian dollar was close to five-month highs.
But German industrial plunged the most on record in April as the coronavirus pandemic forced companies in Europe's largest economy to scale back production.
At 0700 GMT, the dollar index was at 96.88, up 0.2 per cent on the day. It then fell to 96.82 by 0740 GMT.
The euro edged up, having slipped down from recent highs, at $1.1299. It hit a three-month high of $1.1384 last week after the European Central Bank announced that it was expanding its stimulus programme.
ECB President Christine Lagarde will speak at the European Parliament at 1345 GMT.
“EUR/USD may be due some consolidation after a very strong rally, but we suspect the 1.1230/40 area offers good support now before EUR/USD advances to the 1.15/16 area,” ING strategists wrote in a note to clients.
They also said the risk of a second wave of COVID-19 and the possibility the Federal Reserve will stop providing cheap liquidity threatened the prevailing narrative of an economic recovery.
Investors are now waiting for more information about a European Union recovery fund proposed last month - a 750 billion-euro plan to prop up European economies hammered by the coronavirus pandemic.
The safe-haven Japanese yen rose against the dollar, at 109.53 at 0730 GMT, but the Swiss franc fell around 0.2 per cent against both the dollar and euro .
Major oil producers agreed to extend a deal on output cuts to the end of July as China's crude imports hit an all-time high in May. The Norwegian crown held close to three-month highs against the dollar and euro as oil prices climbed.
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