NEW YORK (CNN/Money) - The dollar gained strength against the euro Monday after European Central Bank President Wim Duisenberg said a Group of Seven (G7) call for exchange rate flexibility last month was not directed at the euro.

"There was no statement specifically about euro/dollar; that was maybe misunderstood," Duisenberg told reporters on the sidelines of a news conference in Moscow.

YOUR E-MAIL ALERTS Currency European Central Bank Bonds or Create your own Manage alerts | What is this?

Duisenberg's attempt to clarify why the dollar has fallen so far and so fast against the euro seemed to make thin currency markets dispel dollar-bearish sentiment, for now.

At around 4:00 p.m. ET, the euro was down 0.9 percent at $1.1703. It traded at $1.1813 late Friday.

The greenback also inched higher against the Japanese yen. The dollar rose 0.4 percent against the yen to ¥108.95 from ¥108.51 late Friday.

In September, the G7 industrialized nations issued a statement calling for more flexibility in exchange rates. The currency market widely perceived this as a demand that Japan and China stop intervening in markets to weaken their currencies in support of their export markets.

The call pushed the yen to three-year highs against the dollar. The euro, swept up in a frenzy of dollar sales, rose to within one cent of its all-time high.

But Duisenberg's clarification Monday sent the single European currency down more than 1 percent against the dollar and the yen. The euro last week had vaulted to its highest since mid-June against the dollar.

Related Stories • Yen reaches 3-year high • Bank of Japan eases monetary policy

"Today's comments are back on messages, noting as several European officials have said in recent days, that the G7 statement was aimed at Asia, not Europe," said Marc Chandler, chief currency strategist HSBC in New York. "This has helped push the euro to new five-week lows against the yen."

U.S. dealings were marked by the Columbus Day holiday, a lack of economic news or data, and scant trading volumes, all of which aided the dollar's recovery, amid profit taking in euros, some New York based traders said.

But later in the week, markets could react in anticipation of a raft of U.S. economic data and corporate earnings, traders said.

Bond markets, which closed early Friday before the holiday, are closed Monday for Columbus Day.  

-- from staff and wire reports