The US dollar has dipped ahead of the looming shutdown of the US government as a political stalemate over funding the government persists.

The euro bought $US1.3524 around 2100 GMT on Monday, up slightly from $US1.3519 late Friday.

The dollar was steady against the Japanese currency, trading at 98.21 yen – after earlier falling to a seven-week low of $US97.50 – compared with 98.24 yen Friday.

The euro also wavered a little lower, fetching 132.81 yen, down from 132.88 yen.

US lawmakers had until midnight Monday (0400 GMT Tuesday) to prevent the first US government shutdown in 17 years by agreeing on budget legislation for the 2014 fiscal year that begins Tuesday.

But a few hours before the deadline, a deal appeared remote.

US President Barack Obama warned that the imminent shutdown of large parts of the federal government would have real and dramatic economic consequences for thousands of Americans.

Obama late Monday blamed the “extreme right wing” of the Republican Party for holding the budget hostage in a bid to defund his trademark health reform.

“Investors have very little confidence in the US government’s next steps and have refrained from any major changes to their positions,” said Kathy Lien of BK Asset Management.

The dollar slipped to 0.9046 Swiss franc from 0.9052 franc late Friday.

The pound climbed to $US1.6185 from $US1.6137.