The dollar weakened ahead of three central bank meetings that may underscore market expectations for U.S. interest rates to fall this year as rates in other major economies climb higher.
While the Federal Reserve is seen holding rates at 5.25% after its meeting on Wednesday, analysts say officials may concede signs of slower U.S. growth after recent data revealed anemic job growth in April, causing the dollar to drift lower.
The Bank of England, meanwhile, is seen lifting rates to 5.5% on Thursday, a move that would put UK interest rates above those in the United States for the first time since January 2006.
The European Central bank is expected to hold its rates steady at 3.75% on Thursday but signal a hike in June.
"We are probably going to be reminded once again by the Fed that U.S. rates are likely to go down, while in Europe, they are on their way up," said David Watt, strategist at RBC Capital Markets in Toronto. "That will be enough to favor more dollar selling."
The greenback lost ground against all the major currencies, though a public holiday in Britain thinned out trade and kept losses modest.
The euro was last trading , near a lifetime high above $1.3680.
Analysts said Nicolas Sarkozy's victory in the French presidential election provided modest support.
"With Sarkozy's policies aimed at making the labor market more flexible and promoting market oriented policies to improve economic growth, his win is supportive of the euro," strategists at BNP Paribas wrote in a note to clients.
The dollar was also down against the yen and pound .
The Canadian dollar was the biggest mover on the day , rising to an 11-month high against its U.S. counterpart after Alcoa announced a $27 billion hostile bid for Canadian rival Alcan.
U.S. In Focus
Analysts said slower U.S. growth at a time when other major economies are moving full steam ahead should keep the dollar under pressure.
But while U.S. consumers have so far continued to spend, retail sales data due on Friday are seen of particular importance.
"Everyone is expecting euro-dollar to hit $1.40 in the next month or so, but if the consumer continues to spend without restraint, that certainly helps keep the dollar supported," said Ezechiel Copic, FX analyst at IDEAglobal in New York.
Until then, he said the euro could make a run at its record high against the dollar if the Fed on Wednesday emphasizes growth risks while downgrading its assessment of inflation risks.
"The focal point is the possible timing of an interest rate cut in the United States, but at this point it's hard to say when that will be," said Kikuko Takeda, an analyst at Bank of Tokyo-Mitsubishi UFJ.
A Reuters poll showed that the soft jobs data reinforced Wall Street's view that the Fed will cut rates this year.
The median forecast of 18 primary dealers who took part in the survey was for the fed funds rate to stand at 5.0% at the end of December, just a quarter-percentage point below its current level.