In U.S. trading on Monday, EUR/USD was up 0.15% at 1.3575.
An ongoing impasse among U.S. lawmakers and the White House over terms needed to create a spending package and reopen the government sent investors avoiding the dollar on Monday.
Markets were also growing increasingly worried that the deadlock will affect negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by Oct. 17, after which the risk of default rises.
Republican House Speaker John Boehner said Sunday the House will not support bills to fully reopen the government or increase the government debt ceiling unless the Obama administration agrees to talks aimed at reducing the deficit.
A U.S. default could roil markets and slow U.S. recovery by further eroding confidence in Washington's ability to craft economic policy.
Meanwhile in the euro zone, data revealed that the economy grew by 0.3% in the second quarter, unchanged from a preliminary estimate and in line with forecasts.
A separate report showed that the Sentix index of euro zone investor confidence dropped to 6.1 in October from 6.5 in September as concerns over the political impasse in the U.S. hurt sentiment.
Analysts had expected the index to rise to 10.6 this month.
The greenback up against the pound, with GBP/USD up 0.50% at 1.6089.
The yen, meanwhile, saw safe-haven demand in a session absent of U.S. economic indicators due to the government shutdown.
The dollar was down against the yen, with USD/JPY down 0.60% at 96.88, and down against the Swiss franc, with USD/CHF down 0.38%at 0.9038.
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.15% at 1.0311, AUD/USD up 0.01% at 0.9433 and NZD/USD trading up 0.02% at 0.8322.
Official data showed that the number of building permits issued in Canada in August was down 21.1% following an upwardly revised increase of 21.4% in July.
Analysts had expected building permits to decline by 7%.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.26% at 80.03.
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