The dollar fell to three-month lows against the euro for a second straight day today as worries about the US economy continued to plague the greenback.
The dollar fell as far as $0.8942 per euro, its weakest performance since May 4th, before steadying to around $0.8925 by 8.40 a.m. - little changed from late New York levels.
The dollar's slide started after the Federal Reserve's Beige Book painted a bleak picture of the US economy on Wednesday and renewed warnings by US manufacturers that the strength of the dollar was hurting competitiveness.
The downbeat Beige Book put further pressure on the dollar and the correction is likely to continue as long as US data does not support the notion of a turnaround in the US economy.
Dealers said the dollar's losses against major currencies were accelerated after the breach of key chart support levels that triggered automatic orders to sell dollars.
But they admitted to being puzzled at the dollar's slide since there was little in the way of fresh news to pin it on.
Some traders put the dollar's sharp move down to the downbeat message of the Fed's beige book, recent weakness in US stocks and endless speculation about the US commitment to a strong-dollar policy.
The dollar's fall also came after a senior excutive from General Motors added his voice to industry calls for a change in Washington's strong dollar policy.
Other dealers pointed a finger at the seasonal dearth of liquidity, which tended to inflate the impact of even small orders as dealers slashed prices to avoid being hit.