LONDON (AFP) - The dollar fell to a new eight-month low against the euro and struggled against the yen as dealers drove the greenback lower amid concerns about imbalances in the American economy.
The single European currency rose to 1.2579 dollars in early European trading from 1.2514 late on Tuesday in New York.
The dollar was quoted at 108.29 yen against 108.28 on Tuesday.
The US currency has been weakened by concerns over softer American economic activity data, a widening trade deficit, weak equity portfolio flows and outflows of foreign direct investment, analysts said.
Doubts have also sprung up in the market about whether the US Federal Reserve will raise interest rates at its next meeting November 10.
"US data confirms the economy has plateaued," Commerzbank analysts wrote in note to clients.
"Consequently, the Fed will continue to remove policy accommodation at a measured pace. The neutral dollar bias within broad range levels has given way to renewed pressure on major range boundaries.
"We are anticipating a resumption of cyclical dollar weakness," they added.
Support for the yen spurred by a drop in oil prices faded in the face of a sharp fall in Tokyo stocks, though the Japanese unit held its ground against the dollar.
A drop in oil prices Tuesday eased concerns over the possible negative impact on Japan's economy, which relies heavily on oil imports.
"When oil prices fell, some thought it was an opportunity to buy yen but I don't think the yen will go to 105 to the dollar just because of that," said Kazuhiro Kaneko, a dealer with Trust and Custody Services Bank in Tokyo.
Meanwhile the British pound fell back slightly, notably against the euro, on news that Bank of England policymakers did not consider a rate hike at their last rate setting meeting earlier this month.
The minutes of the meeting showed that the nine-strong monetary policy committee voted unanimously to keep interest rates on hold at 4.75 percent in October, and that despite faltering economic growth and moderating house price inflation, they did not discuss the possibility of another quarter-point hike.
The euro was changing hands at 1.2579 dollars from 1.2514 late on Tuesday in New York, 136.28 yen (136.46), 0.6958 pounds (0.6933) and 1.5391 Swiss francs (1.5380).
The dollar stood at 108.29 yen (108.28) and 1.2230 Swiss francs (1.2291).
The pound was at 1.8081 dollars (1.8042), 195.79 yen (195.32) and 2.2108 Swiss francs (2.2177).
On the London Bullion Market, the price of an ounce of gold stood at 421.95 dollars against 419.35 on Monday afternoon.