The euro firmed in the European session on Monday, while the U.S. dollar fell, as European stocks followed Asian markets higher amid a recovery in oil prices and on easing fears over an earlier tapering of the Federal Reserve's bond purchase program.

Investors cheered comments from Dallas Fed President Robert Kaplan, who told Fox Business Network last week that he might adjust his views about the plan for an early tapering of the bond purchase program.

The Jackson Hole meeting will begin later this week, with market participants looking forward to Chairman Jerome Powell's speech for more clues about when the central bank will slow the pace of QE program.

This week's economic calendar features U.S. reports on home sales, durable goods and personal income and spending.

Flash survey results from IHS Markit showed that Eurozone private sector logged one of the strongest growth seen over the past two decades in August as the further reopening of the economy underpinned expansion in the services activity.

The flash composite output index declined to 59.5 from a 15-year high of 60.2 in the previous month. The reading was forecast to fall marginally to 59.7.

Nonetheless, a reading above 50 suggests expansion.

The services Purchasing Managers' Index came in at 59.7, while the score was expected to remain unchanged at 59.8.

The manufacturing PMI fell to 61.5 from 62.8 a month ago. The reading was forecast to drop to 62.0.

The euro advanced to a 1-week high of 129.10 against the yen, 5-day highs of 1.1733 against the greenback and 1.0752 against the franc, off its prior lows of 128.28, 1.1691 and 1.0716, respectively. The euro is seen finding resistance around 131.00 against the yen, 1.19 against the greenback and 1.10 against the franc.

The euro, meanwhile, slipped to 4-day lows of 1.4902 against the loonie, 1.6314 against the aussie and 1.7058 against the kiwi, after gaining to 1.5014, 1.6413 and 1.7143, respectively in early deals. Should the euro extends decline, 1.47, 1.60 and 1.68 are possibly seen as its next support levels against the loonie, the aussie and the kiwi, respectively.

The euro eased off to 0.8564 against pound, from near a 5-week high of 0.8594 seen at 4:45 am ET. Next key support for the euro is seen around the 0.84 level.

The greenback dropped to 4-day lows of 1.2734 against the loonie, 0.7181 against the aussie and 0.6863 against the kiwi, following its prior highs of 1.2833, 0.7119 and 0.6818, respectively. The currency may challenge support around 1.25 against the loonie, 0.75 against the aussie and 0.70 against the kiwi.

The greenback pulled back from its early highs of 0.9178 against the franc and 1.3607 against the pound, falling to a 5-day low of 0.9140 and a 4-day low of 1.3674, respectively. The greenback is poised to challenge support around 0.90 against the franc and 1.41 against the pound.

In contrast, the greenback was up against the yen, at a 4-day high of 110.10. The greenback is likely to find resistance around the 112.00 level.

Looking ahead, Eurozone flash consumer sentiment index for August will be featured at 10:00 am ET.

U.S. existing home sales for July are due at the same time.

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