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Mohamed El-Erian, the chief economic adviser at Allianz SE (ALVG.DE), said on Monday he expects this week's Federal Reserve policy-setting meeting to set the stage for a June interest rate hike.

El-Erian told Reuters: "Fed officials may even be tempted to hike as early this week though this remains a lower probability event." The Federal Open Market Committee is due to meet Tuesday and Wednesday and then next on June 14-15.

"Notwithstanding the headwinds from abroad, the Fed is likely to hike this year at least once, and possibly twice," El-Erian said.

New U.S. single-family home sales unexpectedly fell in March, but the decline was concentrated in the West region, suggesting that the housing market continued to steadily improve.

The Commerce Department said on Monday new home sales decreased 1.5 percent to a seasonally adjusted annual rate of 511,000 units. February's sales pace was revised up to 519,000 units from the previously reported 512,000 units.

The USD eased overnight to see the EUR trade as high as 112.78, while USD/JPY tested below 111.00 before recovering somewhat late in trade.

Saudi Arabia's cabinet has agreed on a broad-based economic reform plan, known as Vision 2030, revealing how the oil-reliant state plans to diversify its economy over the next 14 years.

Saudi Arabia says it wants to minimize its dependence on oil.

In an interview with Al Arabiya news, Deputy Crown Prince Mohammed bin Salman unveiled the Vision 2030 plan, which aims to curtail the kingdom's "addiction" to oil. During the interview, the prince discussed expanding the country's Public Investment Fund to $2 trillion up from $160 billion.

Oil prices fell more than 2 percent on Monday as data pointed to fresh U.S. crude builds, while leading banks in commodities said the two-month long oil market rebound has defied fundamentals.

A Reuters poll forecast a nationwide U.S. crude build of 2.3 million barrels last week, a third straight week of such builds. [EIA/S]

Market intelligence firm Genscape reported that stockpiles at the Cushing, Oklahoma delivery point alone rose by over 1.5 million barrels in the week to April 22, traders said.

Analysts at Morgan Stanley attributed oil's recent gains to macro and commodity funds activity, index- and exchange-traded fund flows and buying from investors fearful of missing out, even as fundamentals remained bearish and looked set to worsen as prices moved higher.

Barclays, in an oil sector report, said it was "not yet convinced that prices will remain here or go even higher".

U.S. crude CLc1 settled down $1.09, or 2.5 percent, at $42.64 a barrel. Last week, it hit a five-month high of $44.49.

Brent LCOc1 closed down 63 cents, or 1.4 percent, at $44.48. It hit a mid-November high of $46.18 last week.

Reference: Reuters, Business Insider, MKS Group