The dollar got a hand-up from a deal to end a deadlock over the U.S. budget, with the index that measures it against a basket of other currencies up 0.05%.
The euro hit two-month lows at $1.1127, falling further after the weak PMIs. It also hit a near seven-month trough against the yen at 120.19 though it recovered from a two-year low versus the Swiss franc.
A recession in Germany's manufacturing sector worsened in July with the performance of goods producers dropping to the lowest level in seven years while French business growth slowed unexpectedly, the purchasing manager surveys showed.
Sterling rose 0.1% to $1.2452 having fallen for three sessions in a row as the Brexit outlook got ever murkier.
Boris Johnson will become Britain's new prime minister on Wednesday, with investors unclear as to whether he will lead the country to a no-deal EU exit or find a compromise.
"We believe that in the short term the market is overstating the risk of a no deal," said Mark Haefele, chief investment officer at UBS Global Wealth Management.
"While a no-deal Brexit remains possible over the longer term, our view is that the most likely path in the short term is for a further extension to the UK's 31 October exit day, either due to a change in stance from PM Johnson, or in the case of a general election."
Gold gained nearly half a percent to $1,423.65 per ounce , though it was still short of last week's peak of$1,452.60.
Oil prices nudged higher on rising tensions over Iran, a sharp fall in U.S. crude stocks and positive signs on Sino-U.S. talks, although worries about weak demand kept a cap on gains.
Brent crude futures added 0.2 percent to $63.96, while U.S. crude rose 0.4% to $56.99 a barrel.
