By Gina Lee

Investing.com – The dollar was up on Monday morning in Asia, remaining near its highest levels in months. Investors turned to the safe-haven U.S. currency as COVID-19 cases continue to increase globally, in turn prompting concerns about the global economic recovery.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.02% to 92.707 by 12:28 AM ET (X AM GMT).

The USD/JPY pair edged down 0.15% to 109.91.

The AUD/USD pair was down 0.22% to 0.7386. and the NZD/USD pair edged down 0.20% to 0.6994.

The USD/CNY pair inched up 0.01% to 6.4790 and the GBP/USD pair inched down 0.09% to 0.3760.

The riskier Australian dollar fell to its lowest level against its U.S. counterpart since 2021 as the Asia session got underway while hitting a five-month low against the safe-haven Japanese yen.

Countries such as Australia and South Korea reimposed restrictive measures to curb their latest outbreaks, while the first cases were reported in the Olympic village in Japan ahead of the start of the Tokyo Olympic Games on Jul. 23. The global seven-day average of daily new COVID-19 cases is over half a million for the first time since May 2021.

"The market is really trading on the uncertainty in the air around COVID-19," National Australia Bank (OTC:NABZY) senior currency strategist Rodrigo Catril said on the bank's morning podcast.

"That is the dominant factor," he added, while adding a surprise fall in U.S consumer sentiment had also unsettled investors.

With no significant economic data due until the release of the U.S., manufacturing and services purchasing managers’ indexes on Friday, COVID-19 will likely remain a focus for investors until then.

The People’s Bank of China will set its benchmark loan prime rate on Tuesday, with an outside chance that the rate will be lowered. The European Central Bank and Bank Indonesia will also hand down their respective policy decisions on Thursday.

With England due to lift most of its COVID-19 restrictive measures on Jul. 19, or ‘Freedom Day,’ the pound was at its lowest level in more than a week. Despite hopes that were pinned on the U.K.’s COVID-19 vaccination drive, the number of cases has spiked in the preceding days.

With Health Secretary Sajid Javid testing positive for COVID-19 on Saturday, Prime Minister Boris Johnson and Chancellor Rishi Sunak are currently self-isolating after coming into contact with him.

"The Netherlands relaxed all restrictions and saw cases soar from 500 to 10,000 per day in two weeks, and the government has had to reverse course and is now waiting nervously to see what happens to hospitalizations... the UK's 'Freedom Day' today has some worried it could have a similar experience. " ANZ Bank analysts said in a note.