The US dollar index was largely unchanged on Monday, having given up earlier gains driven by improved risk sentiment. The Japanese yen weakened for a second consecutive trading session.

The Bloomberg Dollar Spot Index declined less than 0.1% in New York afternoon trading, after rising by as much as 0.3% earlier in the session.

A report showed the US services sector expanded at a slower pace in June, though firms increased hiring as cost pressures eased.

"This suggests a rising risk of improved US-China relations, which would be favorable for global growth and negative for the US dollar," said Noah Buffam, a strategist at CIBC Capital Markets.

The USD/JPY pair rose 0.5% to 162.11, following a gain of approximately 0.1% in the prior trading session.

Options markets continued to signal bearish sentiment on the yen, with the US-Japan interest rate differential still heavily favoring the dollar, and Japanese authorities having yet to intervene.

The USD/CAD pair advanced 0.1% to 1.4209.

The EUR/USD pair rose less than 0.1% to 1.1442, as the options market began to question the long-term bullish thesis for the euro.

The New Zealand dollar weakened alongside many other G10 currencies, with the NZD/USD pair falling 0.1% to 0.5704.