Rise in European and US stocks improved risk appetite and this boosted demand for higher yielding currencies. The dollar fell against the euro. The euro was quite volatile swinging between gains and losses against the dollar.
John McCarthy, director of foreign exchange at ING Capital Markets in New York said: "It’s still a risk play. We saw gold and oil come off and that caused the dollar and yen to recover a bit, but overall the euro is still higher and dollar/yen is still up.The market is still in a “buy dollar” mode, “but selectively,” with investors still taking long bets on the dollar versus the euro and sterling, but not against the likes of the Norwegian and Swedish crowns."
Sterling was down 0.3 percent at $1.4956. The euro rose 0.4 percent to $1.3648. The dollar was up 0.6 percent versus the yen at 90.54 yen.