The U.S. dollar rose against most currencies Wednesday after Moody's cut Portugal's debt to junk status, triggering a sell-off in European financial markets.
Borrowing costs increased in Spain and Italy as fears of uncomfortable debt levels sent stock markets sliding across Europe.
"The move is a stark reminder that problems in the periphery of the eurozone are not solely in Greece," said Capital Economics analyst Emilie Gay. Greece's debt crisis and worries about a possible debt default has made euro trading very volatile since late April.
The euro fell to $1.4296 in late trading in New York from $1.4410 late Tuesday. Since peaking just under $1.50 in the first week of May, the euro has ranged widely because of worries about possible debt defaults and slowing growth, briefly falling below $1.40 last month.
Also pushing the dollar higher Wednesday was China's efforts to cool inflation and slow growth by raising its key interest rate. A sharp slowdown in the world's No. 2 economy could hurt the world's big exporting companies and commodity producers that sell goods to China.
The British pound fell to $1.5982 from $1.6047, and the dollar rose to 96.57 Canadian cents from 96.29 Canadian cents.
Against a group of six major currencies, the dollar rose about 0.5 percent.
Investors often seek the safety of the dollar when they're worried about slowing global growth. The yen and Swiss franc also tend to get a safe-haven boost against the rest of the world's currencies.
The dollar dipped to 80.97 Japanese yen from 81.04 yen, and was almost unchanged at 0.8403 Swiss franc.