The dollar fell against the euro after a report showed US consumer confidence slipped in March, which has heightened concerns the US economy is weakening.
The index by the Conference Board, a private business research group, said it fell to 107.2 in March from a downwardly revised 111.2 last month.
Rising petrol prices and falling stock prices contributed to the slightly more pessimistic mood in the month.
February's figure was originally 112.5.
The report, which is more sensitive to labor and housing market developments, reinforced fears of a U.S. economic slowdown that could force the Federal Reserve to cut interest rates.
The euro was trading at $1.3358, up 0.2% on the day.
The latest report also comes as rising subprime mortgage rates have squeezed high-risk borrowers with weak credit.
A report yesterday showed showed sales of new US homes unexpectedly fell 3.9% in February to the lowest rate in nearly seven years.
Economists worry that falling home prices and the subprime crisis could spark lenders to tighten credit to a wider swath of borrowers, thus depressing consumer spending and slowing growth.
Today a senior staff member of the US Federal Reserve said the central bank is concerned about difficulties in the subprime mortgage market that could hit some borrowers and last as long as two years.
'Although there are some indications the market is correcting itself, we remain concerned that over the next one to two years, existing subprime borrowers may face more difficulty,' a Federal Reserve offical said.
Amid the widening crisis in the subprime mortgage sector, she said the Fed is reviewing its regulation on mortgage cost disclosure.
