The Japanese yen and Swiss franc, both traditional safe-haven currencies, gave up much of their initial gains with a pullback in crude prices and anxiety about a disruption in global energy supply, analysts said.

Still, investors remained nervous about another attack, which underpinned demand for currencies of oil exporters such as Norway and Canada.

"The market took it yet with another shrug," said Boris Schlossberg, managing director of FX strategy with BK Asset Management in New York. "If you see another attack, there might be another reaction."

Oil prices had jumped as much as 19% in reaction to the drone strikes, which knocked out more than 5% of global oil output. Yemen's Iran-aligned Houthi group claimed responsibility, but the United States has blamed Tehran.

On Sunday, Trump said he had authorized the release of oil from the U.S. Strategic Petroleum Reserve (SPR) if needed in a quantity to be determined. He also said Washington was "locked and loaded" to retaliate for the attacks on the Saudi facilities.

Another factor boosting the greenback was some exiting of bearish dollar bets in advance of the U.S. Federal Reserve's two-day policy meeting. Traders widely expect the Fed will cut interest rates by a quarter of a percentage point this week.

In July, Fed policymakers lowered short-term rates for the first time since 2008.

"The market wants to short-cover in front of the Fed if the Fed doesn't cooperate," Schlossberg said.

On the other hand, speculators trimmed their bullish bets on the dollar, according to the latest data from the Commodity Futures Trading Commission.

At 11:31 a.m. (1531 GMT), an index that tracks the greenback against the euro, yen, sterling and three other currencies <.DXY> was up 0.38% at 98.63. It touched its lowest level since Aug. 27 on Friday.

The dollar was -0.05% lower at 108.045 yen, recovering from an earlier low of 107.44 during Asian trading.

The greenback fell to 98.655 Swiss francs before reversing to trade at 99.29, up 0.29% on the day.

Among currencies tied to oil-exporting countries, the Norwegian crown strengthened to 8.9179 per dollar earlier before retreating to 8.965.

The Canadian dollar rose 0.3% to C$1.3249 after earlier reaching C$1.3208.

The Russian ruble was 0.3807% higher.

Sterling, which has soared over the past week on growing investor confidence that a no-deal Brexit is off the table, fell back from a two-month high to $1.2418, down 0.68% on the day. It was little changed against the euro to 88.565 pence.

(Additional reporting by Tommy Wilkes in LONDON; Editing by Larry King and Paul Simao)

By Richard Leong