The euro fell against the dollar on fears that the French government might collapse

The euro fell against the dollar Monday as fears mounted that the French government could fall, hampering the country's plans to rein in its growing budget deficit.

The head of France's far-right National Rally, Jordan Bardella, said that unless there was a "last-minute miracle", the party was likely to support the no-confidence motion in the coming days.

National Alliance leader Marine Le Pen has given French Prime Minister Michel Barnier until Monday to meet her party's budget demands.

The euro fell 0.54 percent Monday to $1.0516.

Athanasios Vamvakidis, global head of FX strategy at Bank of America (BofA), said: "The dollar weakened and consolidated last week, but this is not surprising given the strong rise in the dollar after the US presidential election. At the moment, the euro has weakened somewhat due to political uncertainty in France."

"Until there is clarity on the French budget, the euro is likely to remain under pressure," Mr Vamvakidis added.