The euro also came under pressure after a survey showed eurozone manufacturing growth in manufacturing stagnated last month as factories struggled to raise commodities while demand fell. This struck a sharp rise in prices.
As markets in Asia and London were closed due to public holidays, trade was calm.
Investors expect the Fed to raise rates by 50 basis points at its meeting on Tuesday-Wednesday. Uncertainty is linked to the inflammatory position of Jerome Powell, the president of the Fed, in the comments that will follow.
Markets are setting prices in a series of aggressive rate hikes by the Fed as it tries to curb rapid inflation.
This, combined with the expected slowdown in the European Central Bank and concerns about the impact of the war in Ukraine on the eurozone economy, has forced investors to hurry with the dollar and left the euro at its weakest level in five years.
The dollar index rose 5% in April, the best figure since January 2015.
“We expect the dollar to remain strong against the euro as the FOMC (Federal Open Market Committee) and geopolitical issues support the dollar,” UBS Global Wealth Management wrote in a research note.
“Short-term investors may try to sell EURUSD rising above $ 1.08.”
Wealth Management lowered its euro / dollar forecast to $ 1.05 in June from $ 1.11 earlier, $ 1.06 in September, $ 1.08 in December and $ 1.10 in March 2023.
The dollar index was 103.36, an increase of 0.1% over the day. The euro lost 0.2% to $ 1.0525.
Last week, BNP Paribas strategists said that the fall of the euro to a five-year low below $ 1.05 this week is due to strong speculative flows, rather than fears of deteriorating economic prospects.
YUAN UNDER PRESSURE
Elsewhere, the dollar rose half a percent against the Chinese yuan in offshore markets, reaching 6.6895, slightly below its highest level since late 2020.
The pound fell 0.1% to $ 1.2570, while the Japanese yen fell to the dollar by 129.91, but far from recent lows.
Other central bank meetings this week include the Bank of England on Thursday, which is expected to raise the rate by 25 basis points to 1%.
Steve Inglinger, head of global G10 currency research at Standard Chartered, said it would be wise to consider central bank intervention to weaken the rising dollar.
But in the absence of more hawkish politicians outside the United States, the intervention will not have much effect, he added.
“We doubt that the intervention will have a lasting effect until the ECB and the Bank of Japan offer more support for the rate,” he said.
The Australian and New Zealand dollars initially fell sharply in the Asian hours, as sales on the Wall Exchange reduced appetite for risk and reduced the prospects for rising interest rates in the country.
The Australian exchange rate jumped from its three-month low in European times and was last at $ 0.7074, unchanged for the day.
The Australian dollar lost 5.7% last month as fears of a recession in Europe and a blockade in China led to the destruction of risky assets.
The kiwi dollar reached its lowest level since mid-2020 at $ 0.6422 after losing 6.9% in April and then rose to $ 0.6448.