The U.S. dollar retreated Monday with heightened sense of anticipation as political uncertainty looming before Tuesday's presidential election and expectations that the Fed will lower interest rates.

The dollar index that gauges the greenback versus its major pairs dipped fell 0.5% to 103.695 following October’s solid gains.

At the beginning of this week, attention is centered on the crucial US presidential election set for Tuesday, featuring a tightly contested race between Republican candidate Donald Trump and his Democratic challenger, Kamala Harris.

Analysts suggest that Trump's policies regarding immigration, tax cuts, and tariffs would likely exert upward pressure on inflation, bond yields, and the greenback.

Also, markets were anticipating a 25-basis point cut by the Fed at the end of its latest two-day policy meeting on Thursday, following the central bank's significant 50-basis point reduction in September.

Friday’s nonfarm payroll report revealed a sharp decline in jobs for October; however, this data was influenced by hurricanes and labor disputes.

EUR/USD edged up 0.5% at 1.0892, with the pair benefiting from dollar weakness and relatively bolstering recent data.

The final eurozone manufacturing PMI for October rose to 46.0, up from 45.0 the previous month, according to data released earlier Monday.

GBP/USD ticked up by 0.3% to 1.2963, rebounding from the previous week’s dips following the new Labour government's budget announcement.

USD/JPY plunged by 0.6% to 152.11, pulling back from recent three-month highs due to dollar weakness. The yen also gained from a relatively hawkish stance taken by the Bank of Japan last week.