The euro rose above $1.12 for the first time in more than a month on Tuesday while a cut in Australian interest rates failed to weaken the Australian dollar as the fallout of poor GDP data continued to weigh on its U.S. equivalent.
The yen hit its strongest in three weeks, pushing past 102 yen per dollar for the first time since early July after Japan's cabinet approved a package of spending including 13.5 trillion yen in new fiscal measures.
The dollar has been sold steadily since surprisingly weak U.S. second-quarter growth numbers last week, and dealers said even some improvement in U.S. bond yields overnight had failed to turn that around.
"Basically the dollar is just being sold," said Alvin Tan, a strategist with Societe Generale in London.
"We have had a moderate dollar uptrend until the end of last week, but the combination of the dovish Fed (U.S. Federal Reserve) and surprisingly weak second quarter numbers have caused some profit taking."
The dollar index against a basket of six major currencies stood at 95.466, having fallen as low as 95.384 last week when it posted its biggest fall in three months.
Against the yen the dollar eased 0.6% to 101.76 yen . It was down 0.3% at $1.1191 per euro, having traded as weak as $1.1208 per euro.
Weaker-than-expected U.S. manufacturing data on Monday added to a new bout of gloom over global growth and nerves over the fate of banks in Europe were also high on the agenda as German banking shares fell.
Futures markets now price in less than a 40% chance of a rise in official U.S. interest rates by December and the currency world's biggest banking player, Citi, said the largest flows in the past week had been into the euro and out of the dollar.
In theory, worsened growth prospects should strengthen expectations of yet looser monetary policy in Europe and Japan and hence bode ill for the yen and the euro.
But while fiscal stimulus should also carry with it the risk of inflation and rising domestic share prices - factors that should weaken the yen - Tuesday's moves look like an expression of doubts in markets that it will manage to stimulate growth at all.
Crucially, the Bank of Japan last week looked far from ready to weigh in and support the government programme with a crushing new round of yen printing - reflected in a rise in Japanese bond yields in the past few days.
"There's quite a lot of scepticism in the market as to whether this fiscal package can change anything," Tan said. "Japan has already tried this a number of times and everyone knows its not really as big as the headline figure suggests."
If the Australian central bank had been looking for its own boost to exports by cutting interest rates and weakening the Aussie, it looked plain out of luck.
After some initial losses after the Reserve Bank cut rates by a quarter point, the Australian currency was up 0.4% on the day at $0.7561.
"The market had already priced in the cut, so adverse moves against the pair were limited," said Tobias Davis, head of corporate treasury sales at Western Union in London.
"I'm sure the RBA was hoping for a stronger reaction, aiming to keep the country’s exports competitive."