The dollar tumbled across the board today as bomb blasts in Turkey and Iraq heightened global security fears and prompted investors to dump the US currency after a week-long rally.
Already on the back foot after weaker-than-expected US economic data on Friday, the greenback extended losses after news the head of Iraq's US-appointed Governing Council had been killed by a car bomb at a checkpoint in Baghdad.
The killing followed bomb explosions in Turkey on Sunday, just hours before British Prime Minister Tony Blair was due to arrive in the country.
"We are seeing an unwinding of long dollar positions and a flight into safer-haven currencies," said Shahab Jalinoos, senior currency strategist at ABN Amro.
The dollar's biggest losses came against the Swiss franc as soaring oil prices and tumbling stock markets sent investors running for cover. By 08.25 GMT, the dollar was down 1.6 per cent at 1.2740 francs, on track for its biggest one-day fall since January.
The euro also took advantage of the dollar's distress, rising 1.5 per cent to a 10-day high of $1.2060 before paring gains.
The dollar also fell against the Japanese currency, shedding 0.6 per cent to 113.30 yen, as the broad greenback sell-off overshadowed a sharp fall in Toyko stocks.
Tokyo's stock market closed down more than 3 per cent on Monday, hit by worries about global economic growth and high oil prices.