The dollar weakened today on persistent speculation the Federal Reserve could soon take additional measures to ease tightening US credit and liquidity conditions.
Earlier, the euro was up 0.3 per cent on the day at $1.3510 and was up 0.1 per cent against the yen at 154.90 yen, having traded as low as 153.55 yen in early London trade.
The dollar was down 0.3 per cent against the yen at 114.60 yen, trimming earlier losses, but was down around 0.15 per cent on an index basis against a basket of major currencies at 81.30.
In see-saw trade, the yen surrendered earlier gains after the People's Bank of China raised interest rates, with some traders saying it showed the Chinese economy continues to boom and therefore tempted some investors back into riskier carry trades.
But overall, the speculation about a Fed move on rates sooner rather than later weighed heaviest on currency market sentiment.
European stocks pared earlier losses, short-dated government bond yields remained under pressure and credit spreads narrowed.