"Better Chinese data is normally seen as good news for the euro too, due to the large manufacturing sector," Turner added.
The euro was last up 0.5% versus the dollar at $1.0978 after two consecutive daily falls of over 0.5%.
The dollar index , which measures the currency against a basket of currencies, fell 0.4% to 101.67, having risen over 1% in the last two trading sessions.
China's offshore yuan was a touch higher at 6.877 per dollar. Britain's pound jumped despite an unexpected rise in the unemployment rate in the three months to February as pay growth stayed higher than forecast, which could prompt the Bank of England to hike its interest rate again in May.
"Sterling has enjoyed a modest lift from today's data," ING's Turner said.
"Earnings figures have surprised on the upside. At the margin, that supports a 25 basis point hike in May from the Bank of England." The pound was last up 0.5% against the dollar at $1.2438, ahead of inflation data on Wednesday.
In the U.S., data released on Monday showed confidence among single-family homebuilders improved for a fourth consecutive month in April, while manufacturing activity in New York state increased for the first time in five months. Markets are pricing in around a 90% chance of the Fed raising interest rates by 25 basis points at its next meeting in May, with traders still expecting rate cuts towards the end of the year.
"The dollar can remain sensitive to the strength, or not, of the economic data as the Fed likely nears the end of their tightening cycle," said Kristina Clifton, an economist at Commonwealth Bank of Australia (CBA). The Australian dollar gained 0.6% to $0.6741 after Reserve Bank of Australia (RBA) minutes showed the central bank considered an 11th-consecutive rate hike in April before deciding to pause.
The RBA, however, said it was ready to tighten further if inflation and demand failed to cool.
"The minutes of the RBA's April meeting reinforce our view the decision to leave rates on hold did not signal an end to the Bank's tightening cycle," said Capital Economics Australia and New Zealand Economist Abhijit Surya, who expects a final 25 basis point hike in May.
The dollar fell 0.3% to 134.02 Japanese yen , while
the kiwi rose 0.5% to $0.6213.
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(Reporting by Samuel Indyk in London and Ankur Banerjee in
Singapore
Editing by Angus MacSwan and Mark Potter)
