The dollar slipped against a basket of currencies after touching near a four-month high on Friday, as investors pared bullish bets that a solid US jobs report had pushed the Federal Reserve closer to raising interest rates this year.
A slide in longer-dated bond yields also weighed on the greenback, suggesting that because inflation remained low, the pace of the Fed's rate increases would be slow and the US currency's upside potential likely limited.
But the outlook for the dollar remained generally positive on the prospect of higher rates, with most analysts expecting the central bank to begin the monetary tightening at its September policy-setting meeting.
The dollar earlier rose to a two-month peak versus the yen and near a five-month high against the Swiss franc, but by midday also had surrendered those gains.
"With the US dollar rising well ahead of yield differentials, the chances are that a lot of the hawkish news is already in the price, which limits scope for further gains after the September FOMC (Federal Open Market Committee)," said Lena Komileva, chief economist and director at G+ Economics in London.
Analysts said reversals in the dollar's price action are normal when highly-anticipated US economic data such as the non-farm payrolls report is released just before a weekend.
On Friday, data showed US non-farm payrolls data increased 215,000 last month, slightly lower than the market expectations for a rise of 223,000 jobs but still seen as consistent with a strong labor market. Upward revisions to the previous two months and a gain in average hourly earnings also were viewed positively by markets.
Following the jobs report, the swaps market was pricing in a 52 per cent chance of a September rate hike, up from 47 per cent before the data's release.
Christopher Vecchio, currency analyst at DailyFX in New York, said, however, that "given low headline inflation readings and a lack of break-neck speed in the labour market, the first hike in September (or October or December for that matter) is likely to be an isolated event."
In late trading, the dollar index was down 0.2 per cent at 97.650. It earlier rose as high 98.334, its highest level since April 23.
The dollar touched two-month peaks against the yen, rising above 125 yen, but was last down 0.5 per cent at 124.13 yen. The euro, meanwhile, was up 0.4 per cent at $1.0966.
Against the Swiss franc, the dollar last traded up 0.2 per cent at 0.9829 franc. It earlier rose to its highest level since March 20.