The U.S. dollar dropped on Monday as the easing of political tensions in Europe supported the euro.

The shared currency recovered on Monday as Italy took steps to form a new government and German Chancellor Angela Merkel said over the weekend that Germany favored moves toward a European Monetary Fund, according to Reuters.

The euro rose 0.32 percent against the dollar in late trading on Monday. The dollar index, which measures the greenback against six major peers, lost 0.14 percent to 94.026 in late trading.

In late New York trading, the euro increased to 1.1697 dollars from 1.1663 dollars in the previous session, and the British pound was down to 1.3315 dollars from 1.3345 U.S. dollars in the previous session. The Australian dollar rose to 0.7653 U.S. dollar from 0.7570 U.S. dollar.

The U.S. dollar bought 109.72 Japanese yen, higher than 109.53 Japanese yen of the previous session. The U.S. dollar was down to 0.9881 Swiss franc from 0.9887 Swiss franc, and it fell to 1.2930 Canadian dollars from 1.2969 Canadian dollars.