The U.S. Dollar Currency Index, which measures the greenback against a basket of six currencies, was 0.2% lower at 93.802. The index rose 0.8% last week to its highest since late September 2020.

With Chinese mainland markets closed until Thursday for the National Day holiday and South Korean markets also shut on Monday, investor attention was firmly on the upcoming U.S. data.

"Nonfarm payrolls will be the big focus for markets this week," Brad Bechtel, global head of FX at Jefferies in New York.

Friday's data is expected to show continued improvement in the job market, with a forecast for 488,000 jobs to have been added in September, according to a Reuters poll - enough to keep the Federal Reserve on course to begin tapering before year's end.

The Fed has signalled it will likely begin reducing its monthly bond purchases as soon as November but a big stumble in labor data could delay its plans, traders worry.

"Will the Fed react negatively to a 300k print? Likely not. With the momentum on taper already really high, the Fed will have a hard time making an about face after a small miss on what has been a very volatile series," Bechtel said.

"If we were to see something more extreme like a negative NFP print for example, then we could have a different story and the Fed may be forced to at least pause," he said.

The dollar found little support from data on Monday that showed new orders for U.S.-made goods accelerated in August, even as economic growth appeared to have slowed in the third quarter because of shortages of raw materials and labor.

Still, speculators in the FX market have grown increasingly bullish on the U.S. currency in recent weeks, with net long bets on the U.S. dollar climbing to its highest since March 2020, data on Friday showed.

With oil prices rising to a near 7-year high, the greenback was particularly weak against the energy-sensitive Norwegian crown and the Canadian dollar.

The dollar fell 0.6% against the crown and slipped 0.5% against the loonie.

The British pound was 0.5% higher at $1.3611, extending its rebound from the 9-month low touched last week.

"We think the GBP is still on fragile footing since the country will likely still have energy and food shortages in the fourth quarter. This, combined with strong U.S. data this week, could see the GBP re-test the 1.34 zone and resume its September decline," Shaun Osborne, chief currency strategist at Scotiabank, said.

(Reporting by Saqib Iqbal Ahmed;Editing by Alison Williams and Sonya Hepinstall)

By Saqib Iqbal Ahmed