The US dollar extended its previous session's downward trading against most major European currencies after French and German leaders made vague assurances that Europe's banking system would be supported if Greece sparks a sovereign debt crisis during New York late morning trading on Monday.

Europe's fragile banking system will be propped up with intensive recapitalization measures if a Greek default leads to further restructuring of sovereign debt.

"We are determined to do all that is necessary to guarantee bank recapitalization," German Chancellor Angela Merkel said at a news conference after meeting with French Prime Minister Nicolas Sarkozy.

Sarkozy said details would be decided at a future meeting, ahead of the November 3 Group of 20 meeting in Cannes.

Earlier in the day, the data released by think tank Sentix showed that Eurozone investor confidence dropped for a third month in a row in October, to reach the lowest level since July 2009.

The Sentix index for Eurozone dropped to -18.55 from September's -15.37. Economists expected a fall to -18. The confidence index for Germany fell to 1.87 from 3.83 in the previous month.

The greenback traded further lower against most major European rivals and currently trading near a 3-week low of 1.3699 against the euro from last week's New York session close of 1.3388.

The greenback also edged down further to fresh multi-day lows of against 1.5691 versus the British pound and 0.9006 against the Swiss franc, which may be compared to last Friday's closing value of 1.5552 and 0.9280, respectively.

The focus of the unfolding week is likely to the Commerce Department's retail sales report and the weekly jobless claims report. Traders may also closely watch the Reuters/University of Michigan's preliminary consumer sentiment report, the Commerce Department's trade balance report for August and the minutes of the September FOMC meeting.

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