The dollar fell to two-year lows against the euro and seven-month lows against the yen today driven by concerns over the US current account deficit and weak US stocks.
The dollar was trading at $0.9648 per euro, off a two-year low of $0.9669 as dealers booked profits on the single currency's sharp gains this week.
The dollar has fallen 8.5 per cent against the euro this year, declining four cents in just a month. It has lost nearly seven per cent against the yen, raising concern that Japan could sell its currency again in a bid to help its exporters.
Data released yesterday showed the US current account deficit reached record levels in the first quarter, and US stocks tumbled to new lows for the year following continuing tension in the Middle East and a number of corporate profit warnings.
The fortunes of the dollar have been closely linked to those of ailing US stocks in recent weeks, as investors lost their faith in the value of US assets.
Dollar weakness was also pushing other markets lower as multinationals with big dollar earnings faced selling pressure.