Prospects of more aggressive U.S. interest rate hikes were the focus of investor attention on Monday while European shares were hit by a profit wanting from U.S. auto giant Ford.
The dollar slipped against both the euro and yen. Euro zone government bond trades in a narrow range.
The possibility that U.S. interest rates will rise at a faster pace that earlier believed has stirred many markets in recent weeks, helping sink both stock and bond prices.
Accordingly, investors prepared to scrutinise minutes of the Federal Reserve's March policy meeting, due to be published on Tuesday, for clues to future moves.
"The minutes will be critical as there is a lot more focus these days on what the Fed is saying," said Daragh Maher, senior currency strategist at Calyon.
U.S. trade data, a key barometer of the structural health of U.S. economy, is also due on Tuesday.
European stocks, in the meantime, were weakened by Ford Motor Co.'s profit warning.
Ford slashed its 2005 earnings forecast and abandoned its 2006 profit goal on Friday, following in the footsteps of a huge profit warning from rival General Motors Corp. last month.
The announcement put the European automaker sector under pressure, weakening stock indices generally. The FTSEurofirst 300 index and DJ Euro STOXX 50 both lost around a quarter of a percent.