Steep borrowing costs in Europe because of a lingering debt crisis bolstered the dollar Tuesday.
The euro fell to $1.3903 late Tuesday from $1.3968 Monday.
The dollar has fallen against the euro this year _ about 3.6 percent as of Tuesday _ with expectations that rising inflation will force the European Central Bank to lift interest rates despite looming debt woes.
A European rate hike would the euro higher. The Federal Reserve, meanwhile, isn't expected to raise interest rates for as long as unemployment remains a threat in the U.S.
The size of the debt load being carried in Europe, however, rose to the forefront once again Monday after Moody's downgraded Greece's debt and because of Portugal's high cost of borrowing. Greece and Ireland received bailouts from the European Union and the International Monetary Fund last year. Many expect that Portugal will be next.
In other trading Tuesday, the dollar rose to 82.65 Japanese yen from 82.29 Monday, while the British pound fell to $1.6160 from $1.6202. The dollar rose to 0.9356 Swiss franc from 0.9262 Swiss franc; close to a record low reached earlier this month. The U.S. currency dipped to 97.14 Canadian cents from 97.30 Canadian cents, trading not far off a three-year low of 96.84 Canadian cents hit on March 1.