The euro fell to 1.2615 dollars in early European trading from 1.2640 dollars late on Friday in New York.

The dollar climbed to 114.27 yen from 113.97 yen on Friday.

Dealers were awaiting US consumer price index (CPI) data on Wednesday.

"It will be the data from the US that dictates dollar movements this week and with the data unlikely to reverse thinking on the high probability of a rate hike on 29th June, the dollar should retain most of last week's gains," said Derek Halpenny, economist at The Bank of Tokyo-Mitsubishi in London.

The inflation data, due Wednesday, is deemed important in determining whether the Fed will raise its key rate at its next meeting on June 28-29.

"The forex market is likely to stay rangebound until the US consumer price index (CPI) for May, which will serve as the next factor for the outlook on US monetary policy," said Satoshi Okagawa, head of FX trading group at Sumitomo Mitsui Banking Corporation.

The US producer price index (PPI) for May is also to be released Tuesday.

After 16 consecutive quarter-point rises, the Fed, under new chairman Ben Bernanke, has given mixed signals about its intentions ahead of the June meeting.

The dollar was meanwhile being bolstered by data released last Friday that showed a lower-than-expected US trade deficit.

The Commerce Department had said that the US trade deficit had risen in April to 63.4 billion dollars, up from 61.9 billion dollars in March but lower than Wall Street forecasts of 65 billion dollars.

"The dollar continued to receive help from the US trade data last week given few (other) incentives for the market," Okagawa said.

The euro was changing hands at 1.2615 dollars against 1.2640 on Friday, 144.18 yen (144.11), 0.6837 pounds (0.6867) and 1.5541 Swiss francs (1.5562).

The dollar stood at 114.27 yen (113.97) and 1.2317 Swiss francs (1.2309).

The pound was being traded at 1.8452 dollars (1.8403).