Stocks rallied on Monday on the stimulus hopes and as Trump said he would be discharged from the hospital where he in his fourth day of treatment for the virus.

"I think the market is convinced that sooner or later fiscal stimulus will materialize in the wake of data that continues to show a moderating U.S. economy," said Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington.

The optimism was supported by White House Chief of Staff Mark Meadows, who said there is still potential for a deal among lawmakers in Washington on more economic relief, and that Trump is committed to getting the deal done.

Failure to reach a deal, however, would likely be positive for the dollar, which on Monday fell 0.32% against a basket of major currencies <=USD>.

"We think that the prospects for stimulus before the election are still very low," said Erik Nelson, a macro strategist at Wells Fargo in New York. "We're of the view that we should fade this dollar weakness we're seeing today, and in particular against some of these higher risk currencies like the Norwegian krone or the Australian dollar."

The euro gained 0.50% to $1.1774, the highest since Sept. 21.

The Australian dollar rose 0.17% to $0.7174 and the greenback dipped 0.72% to 9.2327 krone.

Trump's COVID-19 diagnosis adds another layer of uncertainty to the U.S. Nov. 3 presidential election, and what it could mean for the greenback.

"There isn't a clear consensus on how the dollar should trade on this degree of political uncertainty in the U.S.," said Jane Foley, senior FX strategist at Rabobank.

Trump said he will leave the U.S. military hospital where he was being treated for COVID-19 later on Monday, adding that he felt "really good."

The U.S. Federal Reserve will release minutes from its September meeting on Wednesday and the European Central Bank will release its latest meeting minutes on Thursday.

Sterling gained 0.35% to $1.2976.

British Prime Minister Boris Johnson and the head of the EU's executive, Ursula von der Leyen, agreed in a phone call on Saturday to step up Brexit talks to close "significant gaps" barring a new trade partnership.

(Reporting By Karen Brettell; Editing by David Gregorio)

By Karen Brettell and John McCrank