The US dollar fell against the euro and the British pound on Friday as fears about the US mortgage market and a related credit crunch unsettled financial markets.
Analysts said the dollar weakened partly as some speculators bet up the odds that the mortgage and credit woes would force the US Federal Reserve to trim interest rates in coming months.
The euro jumped to US$1.3692 around 9pm GMT, rising from US$1.3673 in New York late on Thursday. The US dollar also dipped against the British pound, as the pound rose to US$2.0231, compared with US$2.0225 a day earlier.
The US currency did manage, however, to notch up some gains against the yen, rising to ?118.37 from ?118.17 late on Thursday.
The US dollar dipped against the euro after the Fed injected US$38 billion into the US financial system in a bid to bolster confidence after shares fell sharply on Thursday.
Shares remained volatile on Friday as concerns about the troubled US mortgage sector continued to roil Wall Street.
"It has a two folded impact," Calyon analyst Daragh Maher said in reference to the troubled mortgage market in the US. "It plays as a dollar positive to an extent, when the dollar is used as a safe-haven if there's a global risk problem. It also plays as a yen positive as it reduces risk appetite."
Speculators had bid up the dollar late on Tuesday after the Fed opted to keep US short term interest rates on hold at 5.25 percent, but sentiment turned Friday leading to a weakening of the dollar.
The Bank of Japan injected ?1 trillion (US$8.5 billion) into money markets Friday to try to ease a liquidity squeeze but the move failed to staunch sharp losses in domestic share prices.
The European Central Bank pumped more money into the eurozone banking market, taking its cash injections to 155.85 billion euros (US$212.98 billion) in just two days.
In late New York trading, the US dollar was at 1.1986 Swiss francs, compared with SF1.1967 a day earlier.