The dollar climbed on Monday, building on last week's gains as weakness in global markets, led by Chinese equities, and recent strong U.S. data boosted demand for the greenback.
Against a basket of its rivals (=USD) the greenback rose 0.2 percent to 95.85, edging toward a 14-month high of 96.991 hit in mid-August.
The dollar climbed half a percent last week, marking its second consecutive week of gains as hedge funds ramped up their dollar holdings by $3.4 billion to $28.7 billion last week, the largest since end-December 2016, according to latest data.
The euro (EUR=EBS) fell a quarter of a percent to $1.15 and nearing a low of $1.1463, its lowest since Aug, 20, 2018 as a fresh rise in Italian bond yields weighed on investors' minds.
Moves were limited by a lack of liquidity with Japan on holiday and the U.S. bond market on a break. A sudden and steep rise in Treasury yields had underpinned the dollar for much of last week.
Yields on 10-year Treasuries (US10YT=RR) hit a seven-year peak on Friday as data showed the unemployment rate falling to its lowest since 1969.
The big focus for dollar bulls this week will be the release of U.S. CPI data on Thursday. Markets expect a 0.2 percent increase on a monthly basis in September, similar to last month and a bigger increase will bolster U.S. rate hike bets in 2019.
Sterling fell 0.4 percent to $1.3077 as markets focused on any substantial breakthrough in Brexit negotiations Britain moved nearer to an exit deal with the European Union.