The dollar rose sharply against the euro Thursday due to uncertainty over potential actions next month by the European Central Bank regarding interest rates.
The dollar, however, fell below 80 Japanese yen, sparking expectations of another intervention in currency markets by Japan.
The euro tumbled to $1.4530 late Thursday from $1.4849 Wednesday. The euro had hit its highest level since December 2009 Wednesday, at $1.4942, on expectations that ECB President Jean-Claude Trichet would signal that another increase in interest rates was coming in June. He did not give the hint investors were looking for, prompting an exodus from the euro after its 10 percent gain against the dollar this year. Thursday was the common currency's largest one-day drop against the dollar in 2011.
The ECB, like many central banks around the world, has begun raising interest rates this year to counter the effects of rising food and oil prices. That's weighed on the dollar, because the Federal Reserve is expected to keep rates near zero for a long time.
Higher rates tend to support demand for a currency.
Meanwhile, the dollar fell to 80.19 yen from 80.58 yen, earlier touching as low as 79.54 yen.
The dollar hasn't traded below 80 yen since March 18, when the Group of Seven industrialized nations intervened to weaken the yen following a catastrophic earthquake, tsunami and nuclear crisis.
The low-yielding yen tends to gain against the dollar and other currencies during times of geopolitical or economic stress. On Thursday, the U.S. government said that the number of people filing for unemployment benefits rose sharply last week, triggering concerns about a weakening of the jobs market.
The yen's rise means another intervention by Japan to bring down the value of the currency was likely, but perhaps not until Japan's Golden Week holiday was over, said UBS currency analyst Gareth Berry.
In other trading Thursday, the British pound fell to $1.6379 from $1.6517; the dollar rose to 96.90 Canadian cents from 95.77 Canadian cents; and the dollar gained to 0.8704 Swiss franc from 0.8600 Swiss franc.
The U.S. currency also rose against most other currencies around the world as stocks and commodity prices slid. Like the yen, it's often regarded as a safe haven and can gain on worrisome economic news, even worrisome U.S. economic news.
When traders are feeling confident about the strength of the global economy, a popular bet is borrowing U.S. dollars to buy high-yielding currencies such as the Australian dollar _ that's called the "carry trade." Closing down that trade when markets are volatile boosts the dollar.