Dollar declined across the board on Monday as an improvement in U.S. housing data dampened the greenback's safe-haven appeal. A report indicated U.S. existing home sales jumped by 10.1% to an annual rate of 6.10 million units in October (highest since February 2007) versus economists' expectation of 5.70 millions units. In addition, Federal Reserve Bank of St. Louis President James Bullard said on Sunday that the Fed should extend its mortgage-related assets purchase program beyond a planned end date, reinforcing the view that the Fed will keep interest rates at record low level.

European currencies strengthened against the dollar on Monday amid the greenback's broad-based weakness. Euro, sterling and Swiss franc hit intra-day highs versus the dollar of 1.5000, 1.6649 and 1.0072 respectively before easing in late New York afternoon on profit taking. Earlier, German services and manufacturing PMI rose to 51.5 and 52.0 in November, higher than economists' forecast of 51.2 and 51.7 and well abv previous month's readings of 50.7 and 51.0 respectively. Eurozone manufacturing and services PMI came in at 51.0 and 53.2 respectively versus the expectation of 51.2 and 52.8. In addition, ECB's President Jean-Claude Trichet said interest rates are appropriate and it was still premature to declare crisis is over. Trichet indicated that ECB will counter any threat to price stability and fiscal authorities will also need exit strategy.

Similar to the dollar, the Japanese yen declined against the single currency, British pound, and Australian dollar and touched session lows of 133.61, 148.23, and 82.51 respectively in New York afternoon before retreating on short-covering while usd/jpy also rose to a session high of 89.20.

Data to be released on Tuesday include Japan BoJ report, German GDP, Ifo index, eurozone industrial orders, U.S. GDP, consumer confidence, house price index and FOMC meeting minutes for November.