The dollar spiralled to a new record low against the euro on Tuesday in a broad-based sell-off but held on just above a three-year low on the yen, aided by suspected Japanese yen-selling intervention.
The dollar hit a fresh 11-year low against the British pound and fell to its lowest level in nearly eight years against a basket of currencies, pressured down by persistent concern about the US current account deficit and expectations of continued low US interest rates.
"There is an underlying sense that the dollar has further to go and it would be unwise to bet against that at the current time," said Paul Robson, currency strategist at Bank One in London.
"There are rumours of Bank of Japan intervention this morning to keep dollar/yen well supported. You would have thought that if there wasn't support there from the authorities that it would be pushing lower as well."
By 1245 GMT the dollar had struck a low of $1.2763 per euro and was holding just above that level but still 0.75 percent down on the day. It has shed 13 cents against the euro since the start of November and lost 18 percent over last year as a whole.
The greenback hit a three-year low just above 106.00 yen on Monday but had scrambled back to 106.20 yen on Tuesday after at least two suspected bouts of Japanese yen-selling intervention earlier in the day.
Traders said the Bank of Japan appeared to have bought dollars around 106.10, pushing it to 106.40, although they thought intervention had not been as aggressive as on other occasions.
Sterling climbed above $1.82 for the first time since September 1992, aided also by speculation that British interest rates could be on the way up soon, while the Australian and New Zealand dollars set fresh 6-1/2 year highs versus the greenback.