The dollar index, which measures the greenback against six major peers, was up 0.27 percent to 101.3418 in late trading.
Hamburg Commercial Bank (HCOB)'s flash composite PMI dropped to an eight-month low of 48.9 in July from June's 49.9, the survey compiled by S&P Global showed early Monday.
The result is estimated to add to calls for the European Central Bank to stop raising interest rates after a quarter percentage point rate rise expected on Thursday.
"Manufacturing continues to be the Achilles heel of the eurozone. Producers have cut their output again at an accelerated pace in July, while the services sector's activity is still expanding, though at a much slower rate than earlier in the year," said analyst Cyrus de la Rubia of HCOB.
Britain's economy is also slowing sharply. According to a separate PMI survey published on Monday, the index of British business activity in July fell to a seven-month low of 50.7, down from 52.8 in June.
In late New York trading, the euro fell to 1.1071 U.S. dollars from 1.1124 dollars in the previous session, and the British pound decreased to 1.2824 U.S. dollars from 1.2859 dollars in the previous session.
Meanwhile, the U.S. S&P global manufacturing PMI improved to 49 in July's flash estimate from 46.3 in June. Services PMI edged lower to 52.4 from 54.4 in the same period. Composite PMI declined to 52 from 53.2, pointing to an ongoing expansion in the private sector's business activity.
Following the PMI data, 10-year U.S. Treasury bond yield held steady at around 3.8 percent.
The U.S. dollar bought 141.4370 Japanese yen, lower than 141.8089 Japanese yen of the previous session. The U.S. dollar rose to 0.8681 Swiss francs from 0.8661 Swiss francs, and it was down to 1.3166 Canadian dollars from 1.3202 Canadian dollars. The U.S. dollar increased to 10.4154 Swedish Krona from 10.3879 Swedish Krona.
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