NEW YORK (MarketWatch) -- The U.S. dollar advanced on Monday, up for a third day versus the euro and a basket of currencies, as investors shied away from risk-oriented trades ahead of this week's meeting of U.S. Federal Reserve policy makers and a summit of the leaders of the Group of 20 global economic powers.
The single currency changed hands at $1.4634, down from $1.4720 in North American trade late Friday.
The dollar rose to 92.43 Japanese yen, up more than 1% from 91.43 yen Friday.
The dollar index (DXY 76.95, +0.40, +0.52%) , a measure of the greenback against a trade-weighted basket of rival currencies, rose to 76.999, up from 76.446.
"The U.S. dollar is continuing to gain ground as markets par back 'risk-on' trades, selling the major and emerging currencies as well as equities and commodities," said currency strategists at Brown Brothers Harriman in a research note. "The tone appears to be one of consolidation as the market focuses on this week's key events."
A holiday in Japan curtailed volume in Asia, while a lack of major economic data kept activity under wraps in Europe, strategists said.
Meanwhile, ideas the Fed's rate-setting Open Market Committee could opt Wednesday to signal it's ready to begin outlining an exit strategy from its massive monetary-stimulus efforts helped pressure equity markets, spurring support for the dollar, analysts said.
U.S. stock indexes had a negative start on Wall Street. That followed lower markets in Europe. See Europe Markets.
Dollar/yen broke higher Monday morning "as investors became nervous regarding the outcome of Wednesday's FOMC meeting," wrote strategists at BNP Paribas, in a note to clients.
"The talk is that the Fed might signal an exit from its quantitative easing," they said, while noting "there have been six consecutive months of declining credit suggesting that easy monetary conditions have not yet impacted final credit supply and demand."
The greenback has tended to rally when economic fears are on the rise and to fall when investors are more inclined to take on risk. Dollar weakness has been exacerbated in recent weeks amid signs the greenback is taking on a role as a funding currency for carry trades, in which investors sell a low-yielding currency and purchase higher-yielding currencies.
Nervousness ahead of the G20 summit, which gets under way Thursday in Pittsburgh, has also spurred traders to exit pro-risk trades, said Boris Schlossberg, director of currency research at GFT.
"If the talk out of the G20 actually turns into some concrete policy action, the news of further government regulation of capital markets could cast a pall over risk assets and precipitate a profit taking sell off that many analysts have been anticipating for weeks," Schlossberg said.
