The dollar weakened against the euro on Monday as concern about the eurozone's fiscal problems abated.

The dollar came off its eight month high against the euro as traders took a breather from last week's positions. The euro has come under pressure recently as traders seek the dollar's safe haven qualities in light of mounting fiscal problems in Greece, Spain and Portugal.

While the US economic recovery appears to be on track, sovereign risk in some euro zone countries has fuelled concern that Europe's economic recovery may be some way behind. The dollar was down 0.2% against the euro at $1.3701 on concern that the euro has been oversold.

The dollar index, which measures the US currency against a basket of six others, fell to 80.309 from its high of 80.683 on Friday.

The yen was flat against the dollar at 89.39 yen while sterling was also unchanged against the dollar at $1.5645 ahead of Wednesday's Bank of England inflation report. Analysts expect an upward revision to the inflation estimates for 2010.

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