The dollar on Thursday fell against major rival currencies, pressured by lingering worries about a weak US economy and struggling financial markets, dealers said.
In early London trading, the European single currency rose to 1.4783 dollars from 1.4745 in New York late on Wednesday.
Against the Japanese currency, the dollar sank to 108.73 yen from 109.88.
"The dollar has been undermined by renewed concerns over the health of the US financial system," said analyst Lee Hardman at The Bank of Tokyo-Mitsubishi UFJ in London.
The euro has rebounded from a six-month low of 1.4631 dollars struck on Tuesday as renewed worries about the health of US mortgage finance giants Fannie Mae and Freddie Mac weigh on the greenback.
Dealers said the dollar might come under selling pressure if upcoming US economic indicators, including weekly jobless claims due Thursday and next week's monthly employment report, disappoint markets, dealers said.
"We might see some further scaling back of already diminished expectations for the Federal Reserve to raise (US) interest rates over the next six months," wrote NAB Capital strategist John Kyriakopoulos in a note to clients.
Reports quoting Gary Stern, president of the Federal Reserve Bank of Minneapolis, as saying that now is "a good time to be patient" added to speculation that the US central bank is in no hurry to raise interest rates.
Elsewhere, the foreign exchange market digested a manufacturing survey in the eurozone.
Manufacturing activity in the 15 countries sharing the euro fell for the third straight month in August, with output down in both the manufacturing and services sectors, according to a survey released Thursday.
The eurozone's purchasing managers' index (PMI), compiled by data and research group Markit, rose slightly to 48.0 in August from 47.8 points in July, according to the initial estimate.
A level below 50 for the index indicates a contraction of activity in the sector.
"The message is clearly pretty downbeat. With virtually every index below the 50 boom/bust line, it looks like most sectors and countries in the eurozone are contracting," said Jonathan Loynes, Chief European Economist at Capital Economics.
In London trading on Thursday, the euro changed hands at 1.4783 dollars against 1.4745 late on Wednesday, at 161.79 yen (162.07), 0.7920 pounds (0.7920) and 1.6179 Swiss francs (1.6206).
The dollar stood at 108.73 yen (109.88) and 1.0945 Swiss francs (1.0990).
The pound was at 1.8673 dollars (1.8613).
On the London Bullion Market, the price of gold rose to 820.45 dollars per ounce from 815.75 dollars late on Wednesday.