The euro held near its 1999 launch level versus the dollar in early trade this morning, after the US currency was further undermined by billionaire financier Mr George Soros, who said he was selling dollars.
In Asian morning trade, the euro rose to a high of $1.1745 just shy of its January 1999 launch level of $1.1747, although it eased back by late trade and was flat against late US levels around $1.1713, blocked by options-related sales.
Dollar sentiment was dealt another blow after the US administration raised its terror alert status to the second-highest level, citing the risk of attacks on US soil.
"I have to disclose that I now have a short position against the dollar because I listen to what the secretary of the Treasury is telling me," Mr Soros said in an interview with broadcaster CNBC.
Mr Soros, who had brought the sterling to its knees in the early 1990s and was once dubbed "the man who broke the Bank of England", said he was buying the euro and the Australian, Canadian and New Zealand dollars against the greenback.
Referring to the recent remarks by US Treasury Secretary John Snow, Mr Soros said that the apparent shift away from the strong dollar policy was a "mistake", calling it a beggar-thy-neighbour policy.
Soros Fund Management, an $11.5 billion hedge fund that is one of the world's biggest, is no stranger to currency plays.
The group's flagship Quantum Endowment Fund invests in currencies, debt and stocks. In 1992, when it was called the Quantum Fund, Mr Soros earned $1 billion betting against the British pound.
While the dollar's downtrend remained, the market awaited Federal Reserve Chairman Mr Alan Greenspan's testimony on the state of the US economy and future economic policy before the Joint Economic Committee scheduled for 2:30 p.m. Irish time.