The single currency rebounded against the dollar from 1.5415 to 1.5520 on speculation the European Central Bank will keep its main refinancing rate unchanged at 4.00% this week to control inflation.

ECB President Jean-Claude Trichet warned again on Monday that risk of inflation is ‘significant’ risks with the rise in food and energy costs. Consumer prices in the euro zone rose by 3.3% in the 12 months to April, below the prior month's reading but still well above the ECB's target of about 2%.

The greenback bounced briefly against major currencies after the release of U.S. ISM non-manufacturing data which came in better-than-expected at 52.0 in April (forecast was 49.1), suggesting the U.S. services sector grew unexpectedly, easing some concerns about the economy. However, dollar fell again later in the day after a quarterly Fed survey showed a net 70% of U.S. banks increased loan rates over their cost of funds for commercial and industrial borrowing, comparing with 45% in the January survey.

The British pound tumbled from 1.9785 to 1.9656 and then closed at 1.9722 on dollar’s weakness elsewhere. The U.S. currency retreated against the Japanese yen and Swiss franc from 105.63 to 104.74 and from 1.0597 to 1.0510 respectively.

The Australian dollar and New Zealand dollar advanced against the U.S. currency from 0.9342 to 0.9469 and from 0.7790 to 0.7867 as commodities rallied. The crude oil price surged to a record high of $120.36 per a barrel.

Tuesday will see the release of German, eurozone and U.K. services PMI respectively and eurozone PPI.