NEW YORK (CNN/Money) - The U.S. dollar rallied on Monday, drawing support from a retreat in oil prices and hopes that U.S. economic reports this week would provide positive surprises.

At around 3:30 p.m. ET, the dollar gained against the euro, with the euro buying $1.2143, down from $1.2311 late Friday, and the dollar bought ¥109.80, up from ¥109.37.

Oil prices eased on Monday as Iraq resumed exports from both its northern and southern outlets after lengthy disruptions.

"People are just anticipating strong economic data this week. They are also thinking the summer lull may be over and that we may be surprised on the U.S. durables report this week," Larry Brickman, currency strategist at Bank of America in New York, told Reuters.

The U.S. durables report for July is due on Wednesday, with markets expecting a 1.0 percent rise in new orders, compared with a 0.9 percent increase the previous month.

Traders also cited talk of an influential subscriber-only report, which suggests the Federal Reserve will raise interest rates again in September. That talk made the rounds earlier Monday, partly boosting the dollar and helping to lift U.S. government bond yields to session highs.

As the greenback rose, bonds dropped. The benchmark 10-year note shed 13/32 of a point to 99-23/32 to yield 4.29 percent, up from 4.21 late Friday. The 30-year bond sank 21/32 of a point at 104-13/32 to yield 5.07 percent, up from 5.02 late Friday. Bond prices and yields move in opposite directions.

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The two-year note fell 2/32 of a point to 100-17/32 to yield 2.47 percent, and the five-year bond dropped 7/32 to 100-6/32 to yield 3.46.

Bond investors have been trying to figure out whether the Federal Reserve's theory that a bout of economic weakness would soon give way to more robust growth was based on sound reasoning or simply wishful thinking.

But with the primary answer to that question coming only next week, when the government releases its August payrolls report, Treasurys have been left to dillydally until then.  

-- Reuters contributed to the story