The dollar hit a seven-month low against the euro on Wednesday, extending losses made after minutes of the Federal Reserve's March meeting suggested the central bank was close to ending a two-year run of raising interest rates.
Amid a broad sell-off, the dollar also slipped to a fresh three-month trough versus the Swiss franc, stung by the minutes as well as softer-than-expected data for US producer prices and housing starts.
"The immediate trigger was the Fed's minutes, but sentiment has already been bearish for the dollar in recent weeks," said Tatsuro Karitani, senior trader at Mizuho Corporate Bank, who also cited concerns about tension over Iran's nuclear ambitions.
The minutes from the March 27-28 policy meeting said: "Most members thought that the end of the tightening process was likely to be near, and some expressed concerns about the dangers of tightening too much, given the lags in the effects of policy." At the meeting, the first under new Chairman Ben Bernanke, the Fed raised the overnight rate to 4.75 percent, its 15th straight quarter percentage point increase since June 2004.
The market still expects another rise at the next meeting in May, but the minutes reduced the prospects for a further tightening beyond that, traders said.
Helping to cement such expectations, San Francisco Fed President Janet Yellen said on Tuesday that the Fed was "highly alert" to the possibility of too much monetary tightening.
For more clues about the direction of US rates, the market was looking to consumer prices data for March due later in the session, traders said. Economists expect a 0.4 percent rise in prices from February, when the edged up 0.1 percent.
The dollar bought 116.95 yen, down slightly from around 117.05 yen in late New York trade and off nearly a full yen from the late levels in Tokyo on Tuesday.
The euro was at $1.2345, just off the fresh seven-month high of $1.2368 hit earlier in the session.
The dollar was at 1.2700 Swiss francs after having slipped to around 1.2665 francs, a three-month low.
As the yen edged up versus the dollar, the euro also eased against the Japanese currency to around 144.45 yen, still in sight of the record high of 144.88 yen hit earlier this month.
After trading above 118 yen for the most part of last week, the dollar has slipped back towards the lower end of the 115.50-119.50 yen range in which it has shuffled since late January.