At the onset of a holiday shortened week for the American markets, the euro seems to begin a recovery against the greenback. The euro jumped to a two-week high versus the dollar on Monday underpinned by comments by European Central Bank President Jean-Claude Trichet who last Friday signaled an imminent interest rate hike in the euro zone. Trichet on Saturday refused to elaborate on his comments on Friday, when he had said the ECB was ready to moderately augment interest rates, saying he had made himself clear.

The dollar fell from a near two-year high against the yen, but traders expected the Japanese currency to weaken as interest rates as Japanese policymakers debate over when to cease the nation's loose monetary policy. The yen was up 0.15 percent at 118.95 versus the dollar, but still hovering near two-year lows against the dollar. Earlier in the session, the yen weakened across the board, hitting an eight-year low against the New Zealand dollar and testing a seven-year trough versus the Australian dollar. Traders have little data to trade off of as holidays in Japan and the United States later this week reduced the number of scheduled economic releases.

Boris Schlossberg is a Senior Currency Strategist at FXCM.