The dollar's decline deepened Wednesday after the Federal Reserve and Chairman Ben Bernanke signaled that interest rates will stay low for some time.
The euro rose above $1.47 to its highest point since December 2009. The dollar neared a 17-month low against the British pound and gave back some of the day's gains versus the Japanese yen. The Australian dollar hit its latest 27-year high.
Higher rates tend to support currencies, and other central banks around the world have begun raising rates in order to combat inflation. The Fed said that although commodity prices have risen "significantly" since last summer, broader inflation remained "subdued," suggesting policymakers don't feel pressure to boost rates because of rising prices for oil and food.
"There is little sign of a shift in the Fed's underlying assessment of inflation," said Brown Brothers Harriman currency analyst Lena Komileva in a research note.
The Fed has kept U.S. rates low, and the dollar has dropped nearly 7 percent this year against a group of six major currencies. That measure hit its lowest point since August 2008 on Wednesday as Bernanke said that the economy still faced significant roadblocks.
Bernanke, in his debut news conference following a Fed policymakers' meeting, said that the Fed's statement that rates will remain "exceptionally low" for "an extended period" suggests that a move to raise them would be at least a couple meetings away.
He said the first step in tightening policy could be when the Fed stops reinvesting the proceeds of its bond holdings. The Fed said Wednesday that its $600 billion bond-buying program would end in June.
Bernanke defended the central bank against criticism that the Fed's actions to support the economy have driven the dollar lower, making gas more expensive for American consumers because oil is priced in dollars. He said that the Fed believes "a strong and stable dollar" is in the interest of both the U.S. and the global economy, and that low inflation and a stronger economy will help support the dollar's value.
Joseph Trevisani, chief market analyst at FX Solutions, said that Bernanke's speech didn't offer any new information that hasn't been mentioned already in previous speeches.
"All of this reaffirmation combined in one news event gave the impression that the Fed is more dovish than it actually is," Trevisani said. "The market is taking it all to mean that the Fed is wedded to a zero percent rate."
In late afternoon trading, the euro jumped to $1.4740 from $1.4632 late Tuesday. The British pound rose to $1.6577 from $1.6475.
The dollar gave back some of its earlier gains against the yen, but remained higher at 82.24 yen versus 81.63 yen late Tuesday. Ratings agency Standard & Poor's cut its outlook for Japan's credit rating to negative, saying the cost of rebuilding after March's earthquake and tsunami will worsen the country's financial condition.
The U.S. currency was nearly unchanged at 0.8767 Swiss franc from 0.8777 Swiss franc, retreating from gains earlier in the day, and dropped to 95.21 Canadian cents from 95.31 Canadian cents.