But as both institutions fell short of details, the dollar wallowed not far from its record low against the Swiss franc, weakened after Standard & Poor's downgrade of the US credit rating, with dollar-funding pressure emerging.
The risk-sensitive Australian and New Zealand currencies stayed on the back foot with the Aussie hitting a four-month trough vs the dollar after oil fell sharply and Asian bourses were battered, driving the safe haven Swiss franc and yen higher.
"The G7 and the ECB didn't prevent investors from pulling out from riskier assets, but I think the ECB will buy substantial amounts of Italian and Spanish debt, providing some confidence to the jittery markets," said Osamu Takashima, chief FX analyst at Citibank.
The pledge from G7 finance leaders to offer ample liquidity to stabilise markets if needed followed a surprise statement from the ECB that it would actively implement its bond-buying programme to fight the euro zone's debt crisis stirring hopes it would buy Spanish and Italian government bonds to short-circuit financial market contagion.
"They (the G7 leaders) are working against pretty bearish market sentiment generated over the last couple of weeks and culminating in the historic nature of the events over the weekend," said Greg Gibbs, strategist at RBS in Sydney.
The euro was up 0.3 percent at $1.4313, after briefly climbing as high as $1.4432, up more than a cent from late New York levels on Friday and a long way from last week's troughs around $1.4055.
Against the yen it edged up to 112.51 yen from New York's 112.16, before reversing direction to stand at 111.63, as the yen got support from weakness in other crosses.
The euro also softened 0.2 percent against the Swiss franc, falling to 1.0855 francs, but held above an all-time low around 1.0719 plumbed last Friday.
Both the franc and the yen were bolstered by safe-haven flows, keeping alive the threat of intervention by Swiss and Japanese authorities to weaken their currencies, whose strength is severely harming their economies.
"We'll likely see intervention again should speculative moves push the yen up sharply. Japanese authorities probably would want to keep (the dollar) above 77.10 yen, the level where they initially stepped in to intervene (on Thursday)," said Yunosuke Ikeda, a senior forex strategist at Nomura Securities.
The dollar fell as low as 77.60 yen on the EBS trading platform and touched a record low versus the Swiss franc under 0.7500. Over the past month it has shed some 6 percent against the Swiss franc and about 4 percent against the yen.
The dollar was last down 0.6 percent at 77.84 yen.
Underscoring lingering anxiety in the market, gold, another safe haven, surged 2.3 percent to another record high above $1,700 an ounce, while commodities tied to economic growth slumped, with US crude oil futures down 3.5 percent.
"There are few places you can obviously hide ... and the ones that you can hide in are doing very well. Gold is the beneficiary because there is no central bank to sell it," Gibbs added.
RISK AVERSION
The greenback stayed under pressure against a basket of major currencies , weighed down by S&P's downgrade of the United States by one notch to AA-plus from the top notch AAA level on concerns about growing budget deficits.
Compounding the greenback's woes, moves in dollar/yen forward contracts suggested a rise in demand for dollar funding. The bid rate on dollar/yen 1-month forwards was quoted at -5.06 forward points at one time on Monday morning, the widest dollar discount since December.
"People are looking for protection, so are accumulating short dated dollar balances. Nobody wants to be caught short dollars if this downgrade causes another funding squeeze," said a dollar/yen forwards trader for a European bank in Tokyo.
Investors also gave commodity currencies a wide berth, prompting further declines in the likes of the Australian dollar. The Aussie dipped to a four-month trough of $1.0313.
"S&P's move can only add to the sense of risk aversion. The Aussie is looking increasingly vulnerable and heading towards and through parity in the short term," said Robert Rennie, chief currency strategist at Westpac Bank.
"But there are a number of firebreaks out there. What the ECB does at the open of the European bond market, what the Fed does tomorrow, those are going to be very significant."
The Federal Reserve holds a policy meeting on Tuesday and there is much talk it could discuss the possibility of yet another round of quantitative easing, although many investors doubted such a move could solve problems facing the US economy.
Copyright Reuters, 2011