NEW YORK (CNN/Money) - The continued weakness of the dollar could drag on U.S. stocks when the markets begin the trading week Monday.

Early Monday, Nasdaq and S&P futures were modestly lower.

The euro touched a record high $1.2985 early Monday before easing back to $1.2960, as the dollar drop in the wake of President Bush's re-election continued amid speculation the nation won't combat high deficits. The dollar retreated slightly against the yen.

Also weighing on investors' minds is the pending Federal Reserve policy meeting. The central bank is expected to raise interest rates a quarter percentage point Wednesday.

One positive for stocks is that oil prices pulled back. U.S. crude futures fell 58 cents to $49.03 a barrel in electronic trading, while Brent oil futures slipped 62 cents to $45.80 a barrel in London.

Stocks are coming off a very positive week in the aftermath of the Bush re-election and a good-sized drop in oil prices. The Dow Jones industrial average rose about 0.7 percent Friday, while the Nasdaq composite index gained about three-quarters of a percent (see chart for details).

For details of Friday's advance, click above.

Asian-Pacific stocks ended mostly lower on concern about the weakened dollar and its impact on companies that sell goods in the United States, with Tokyo's Nikkei index down 0.7 percent. European markets were mixed. (Check the latest on world markets)

Among U.S. stocks trading in Europe, Time Warner (Research) fell 0.3 percent. The media company, parent of CNN/Money, received a favorable mention in the latest edition of Barron's.

Treasury prices fell in early trading, sending the 10-year note yield up to 4.18 percent from 4.17 percent late Friday. Gold was higher.

Pixar shares could get a lift after its latest film, "The Incredibles" opened with domestic box office of $70.7 million, the weekend's top movie, which put it on pace to keep its perfect record of producing nothing but blockbuster hits. Shares of Pixar (Research) hit a record high of $85.10 in trading Friday before closing at $84.45, up 59 cents.

Media conglomerate News Corp. (Research) moved to fight off any hostile bid from U.S. cable company Liberty Media (Research) by adopting a stock options plan to dilute the stake of any hostile bidder. Liberty began a transaction last week that could increase its voting stake in News Corp. to about 17 percent from 9 percent. Shares of News Corp. lost 4.3 percent to close trading in Sydney at 22.69 Australian dollars. The company is in the process of shifting its incorporation to the United States.