The dollar was down against most of its key competitors on Monday as growing expectations for an orderly Brexit strengthened the mood of the pound, the euro and global investors.
A Sunday Times report reports that a UK-wide tariff agreement will be included in the deal that governs Britain's exit from the EU, and investors who sent the pound to $ 1.3062 on Monday are the highest since 22 October.
The Dollar Index, an indicator of its comparison with six major peer groups, was down slightly at 96.45, driven by gains in the euro and pound, which together make up around 70 percent of the index.
However, analysts expect dollar strength to return as investors re-focus on expectations for a tighter US monetary policy, after economic data was unexpectedly strong late last week. Analysts see the Federal Reserve on track to raise rates in December, followed by two more rallies by mid-2019.
Data released on Friday showed US jobs growth rebounded strongly in October, with wages posting their biggest annual gain in 9 1/2 years.
"Employment data has confirmed the strength of the dollar because of the future interest rate differential factor, with the risk that markets will be surprised by a slightly tougher Fed," said Rodrigo Catril, senior currency strategist at NAB.
10-year US Treasury yields were 3.2 percent on Monday and rose on Friday on the job report.
This should help the dollar firm against the safe yen, which hit 113.18 on Monday. The dollar weakened 0.66 percent against the yen in October, as news of trade tensions, geopolitical risks, and a global slowdown in the Japanese currency provided an escape route to safety.
"The dollar / yen will follow US 10-year yields and we are not seeing any major moves down," Catril added.
Although the Brexit Discharge bolstered risk appetite in the foreign exchange markets, the British newspaper Telegraph reported that there were still significant hurdles to the negotiation process.
The pound registered a daily high in early, thin Asian trading, but rose 0.3 percent for the day. Compared to the greenback year, it lost 3.7 percent.
The positive sentiment towards a smooth Brexit gave the euro a small bid even in early Asian trading. The single currency rose 0.11 percent and changed hands at 1.1396.
The offshore yuan was stronger against the dollar at 6.8948. The yuan has gained over the past two trading sessions against the greenback in offshore trading, supported by rising hopes that China-US trade tensions will ease.