A likely bailout for eurozone member Cyprus, the resignation of the Greek finance minister and doubts about Europe's ability to tackle its debt crisis ahead of a crunch summit sent the dollar higher Monday.
The euro fell 0.4 percent to reach $1.2502 ahead of a two-day EU summit from Thursday that will discuss closer fiscal ties in a bid to end the continent's roiling debt crisis.
Ahead of the summit the mood was gloomy.
The finance minister in Greece's new government recused himself from the job after being hospitalized suffering from strong stomach pains and nausea.
The summit had been expected to discuss the terms of Greece's bailout, after elections gave strong support to parties opposed to austerity measures.
Meanwhile Spain formally requested Monday a banking rescue of up to 100 billion euros ($125 billion) and Cyprus also asked for a bailout.
Moody's hit 28 Spanish banks with new credit downgrades after the request.
Cyprus becomes the fifth out of the bloc's 17 members to seek assistance.
"The dollar opened the week with a rally, nearing two-week peaks overall, as skepticism ahead of a European summit and concerns about global growth led investors to haven assets," said analysts at Travelex.
The dollar proved a safe haven for many investors, sending the pound, Canadian and Australian dollar and the Swiss franc down against the greenback.
However the dollar fell 0.7 percent to 79.64 yen.