The dollar dipped on Wednesday as investors weighed prospects for a US economic recovery in light of Washington's plan this week to cleanse banks of bad assets, analysts said.
In early London trade, the euro rose to 1.3506 dollars from 1.3469 dollars late in New York on Tuesday.
Against the Japanese currency, the dollar eased to 97.77 yen from 97.88 yen on Tuesday.
Despite the dollar falling, losses were limited by prospects of a turnaround in fortunes for the economy.
"The dollar continues to be supported as investors are finally seeing a glimmer of good news after being mired in darkness for months," said Ryohei Muramatsu, manager of Commerzbank's Group Treasury Asia in Tokyo.
"While it's still too early to say that market sentiment is turning optimistic, there is mounting anticipation of a US economic recovery later this year, followed by the rest of the world," he said.
US President Barack Obama on Tuesday described the dollar as "extraordinarily strong" and rejected a call from China's top central banker for a new international reserve currency.
Obama said that although the United States was "going through a rough patch," it enjoyed a "great deal of confidence" from investors.