The dollar hovered near a three- week low against the euro on Monday, dogged by worries the U.S. economy may fall into recession and by market expectations for the Federal Reserve to lower interest rates more.
The euro was supported after data late last week showed that euro-zone services growth sprang back in February from a 4-1/2-year low, tempering expectations for a near-term rate cut by the European Central Bank.
A focus for this week will be how the possible bailout of U.S. bond insurer Ambac Financial Group turns out, traders said. A person familiar with the matter said on Friday that a rescue for Ambac may be announced on Monday or Tuesday.
"While the European economy seems to be slowing down, that data has been mixed," said a senior trader for a major Japanese trading house.
"It seems hard for the euro to fall too much," he said, adding that the euro was also supported by the fact that there had been no big negative surprises in earnings reports from European banks this month.
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