The dollar bounced back to a 20-year high on Monday as the euro struggled from the $1.05 mark as investors geared up for a busy week of central bank meetings, including a likely Federal Reserve rate hike.
The euro also came under pressure after a survey showed that industrial production growth in the eurozone stalled last month as factories struggled to find raw materials while demand was hurt by price surges.
Markets in Asia and London were closed for holidays, so trading was quiet.
Investors expect the Fed to raise rates by 50 basis points at its meetings on Tuesday and Wednesday. The uncertainty stems from how belligerent Fed Chairman Jerome Powell's comments will be once the decision is made.
Markets are pricing in an aggressive rate hike by the Fed in an attempt to tame rising inflation.
This, along with expected slower European Central Bank tightening and worries about the impact of the war in Ukraine on the eurozone economy, sent investors looking for dollars and left the euro at a five-year low.
"We expect the US dollar to remain strong against the euro as the FOMC (Federal Open Market Committee) sharp stance and geopolitical concerns support the US dollar," UBS Global Wealth Management said in a research note.
