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The euro rebounded from a 2-1/2-week low against the dollar on Monday as investors monitored a renewed push for peace in Ukraine and a possible increase in defence spending in the euro area.
The euro climbed 0.3 per cent to $1.0404, pulling away from Friday's low of $1.0359, which it had hit after Trump and Ukrainian President Volodymyr Zelenskiy clashed in an extraordinary meeting at the Oval Office.
Zelenskiy received a warm welcome in Britain immediately afterwards, and UK Prime Minister Keir Starmer said on Sunday that European leaders had agreed to draw up a peace plan to present to Washington.
US stocks ended higher after a choppy trading session on Friday, with the Dow gaining about 1.4 per cent and the S&P 500 and Nasdaq both climbing roughly 1.6 per cent.
The US dollar index - which measures the currency against the euro, sterling, yen, Canadian dollar and two other major rivals - eased 0.25 per cent to 107.28.
"It is ever more clear that Europe urgently needs a plan to ensure undisrupted support for Ukraine," said Minna Kuusisto, chief analyst of global macro and geopolitics at Danske Bank, adding the risk is growing that the US might completely cut off aid to Ukraine and Europe needs a plan to fill the gap.
"We argue that arming Ukraine is by far the cheapest option for Europe," she said.
Analysts said a possible peace deal in Ukraine and a likely increase of fiscal spending by euro zone countries could provide some boost to future growth, supporting the currency.
Meanwhile, a more likely selective implementation of tariffs on essential imports would have a smaller effect than a blanket 25 per cent tariff on all EU exports to the United States, analysts say.
Trump had floated last week a 25 per cent "reciprocal" tariff on European cars and other goods.
Commonwealth Bank of Australia analysts, however, expect the dollar to resume its rally this week.
"The trade war is intensifying," they wrote in a client note. "'Peak tariff' has not yet been reached."
Bitcoin surged back to the cusp of $95,000 earlier on Monday after Trump named the token as among those to be included in a new strategic cryptocurrency reserve.
It was changing hands at $91,973, down more than 2 per cent, after jumping more than 10 per cent the day before.
Trump's post was "clearly a positive shock to the crypto scene and a shot in the arm for a market desperately in need of a catalyst to alter the bear trend lower," said Chris Weston, head of research at Australian online broker Pepperstone. He added that it was possible the rally would extend into the first White House Crypto Summit that Trump is hosting on Friday.
The Canadian dollar and Mexican peso each gained about 0.2 per cent to C$1.4444 and 20.50 pesos per US dollar as negotiations with Canada and Mexico are ongoing.
On Friday, US Treasury Secretary Scott Bessent encouraged Canada to follow Mexico in matching US tariffs on Chinese goods.
The yen rose 0.35 per cent to 150.08 per dollar .
The Aussie rose 0.1 per cent to $0.6213, while New Zealand's kiwi was flat at $0.5599.