In parallel, Erlam added that with Hurricane Irma now downgraded to category one, there was hope that the devastation wreaked by the storm would not be as bad as feared, potentially bringing down the eventual bill.
The United States and its allies had been bracing for another long-range missile launch for the 69th anniversary of North Korea's founding on Saturday, but its leader Kim Jong Un hosted a massive celebration instead.
"We have seen investors selling dollars for several weeks now and the weekend combination of risk sentiment getting better and China's reserve requirement news has led to some much needed good news for the greenback", said Alvin Tan, an FX strategist at Societe Generale in London.
"The debt ceiling can being kicked down the road a few months is also providing temporary relief but as always with this kind of thing, the problem has only been delayed rather than resolved".
On Monday, the dollar moved higher on easing concerns that Hurricane Irma weakened to a tropical storm and North Korea did not conduct a nuclear test over the weekend as expected.
Both Paris and Frankfurt were both up 1.1 percent in afternoon trading, while London stocks trailed with a 0.2 percent gain.
The risk on sentiment will likely see the Euro remain on the back foot through the remainder of the day, which could see the Euro give up $1.20 levels early in the session, with the only consideration for the day being any possible friction between the North Korean's and the U.S, though a war of words is more palatable than actual missile or nuclear tests, as far as the markets are concerned. Small insurers, especially ones that do a lot of business in Florida, climbed. Among them, Marinus Pharma (MRNS.O) surged about 56 percent and Idera Pharma (IDRA.O) gained about 16 percent. Royal Caribbean Cruises jumped $3.88, or 3.3 percent, to $121.33 and American Airlines gained $1.27, or 2.9 percent, to $44.87.
Geopolitical tensions are also set to be back on the menu Monday as the United Nations Security Council is expected to vote on Monday on a resolution regarding North Korea.
Oil is up 0.6% at $47.78/bbl, gold is 0.8% lower at $1340/ounce and the 10-year Treasury yield is up 4 bps to 2.1%.
In foreign exchange, the European single currency was trading down at $1.1978 compared with $1.2030 late in NY on Friday. The euro slid to $1.1984 from $1.12028.
On oil markets, U.S. prices fell further after taking a beating Friday caused by Hurricane Irma threatening crude supplies. The benchmark Nikkei 225 index in Japan jumped 1.4 percent as the yen came off recent highs against the dollar, easing pressure on exporters.