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The euro rose for a third day against the dollar on Thursday, pushing above $1.12 for the first time in two months on growing concern over the US economy's prospects.
With signs it will hold off on more monetary easing for the moment, the Bank of Japan also added to trend. The yen rose to its strongest in a month.
The euro, up more than 6 per cent against the dollar since April 13, pushed to a two-month high of $1.12485 in morning trade in Europe.
A low reading of US first quarter growth capped a poor run of economy numbers on Wednesday and the Federal Reserve's policy meeting was also seen confirming it will hold off again with any interest rate rise.
The scenario that has driven the dollar higher over the past year, that the United States is ready for a first rise in rates in almost a decade, is not yet dead. But with other major economies struggling, there are growing doubts.
"We still see this as a correction to the dollar's rise over the last year but near term it probably has further to run. A move up into the $1.15 area is definitely not out of the question," said Ian Stannard, head of European FX strategy at Morgan Stanley in London
"It will need some strong data surprises in favour of the dollar to turn this around."
The Bank of Japan, whose steady campaign of money printing has knocked more than a fifth off the value of the yen in two years, held off with another round of easing on Thursday and insisted it was confident inflation would begin to rise. That prodded the yen to as high as 118.50 in early trade in Europe.
"They have cut their inflation forecast but they still expect inflation to start rising in the second half of the year," said Manuel Oliveri, a strategist with Credit Agricole in London. "That says to me that monetary policy expectations remain stable and yen should hold in a range going forward."
The dollar last traded at 118.94 yen, down 0.1 per cent on the day.
The New Zealand dollar was also a big loser, shedding nearly a full US cent in response to dovish comments from its central bank. It last traded at $0.7614, down 0.9 per cent on the day and retreating from a three-month high of $0.7744 set on Wednesday.
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