The dollar hit new record lows against the euro, the Swiss franc and a basket of currencies on Thursday on growing belief that the U.S. Federal Reserve will cut interest rates again next month.
Adding to downward pressure on the dollar was a recovery in equity markets and a slight pick up in risk appetite which made investors more willing to put on riskier trades in high-yielding or emerging market currencies.
The more risk-friendly mood also hit the yen, a favorite source of cheap funding for the carry trades based on interest rate differentials.
The Japanese currency eased from the previous day's 2-1/2 year peaks versus the dollar, while the high-yielding Australian and New Zealand units -- top carry targets -- gained broadly.
"No one really wants to bet against a fall in the dollar," said Niels Christensen, FX strategist at Nordea.
"Fears of recession or lower activity in the United States and strong expectations of rate cuts is driving the dollar down ... I am struggling to find any factor or event that could turn the tide with the dollar," he added.
The dollar fell to a new record low of 1.1006 Swiss francs before recovering to 1.1019 francs.
The dollar index, which measures the dollar's value against a basket of major currencies, hit a record low of 74.916.
However, the dollar gained against the yen to 108.67 yen, pulling away from the 2-1/2 year low of 108.23 yen hit on Wednesday, according to Reuters data.
Expectations for further U.S. rate cuts were reinforced on Tuesday by the Fed's projection that economic growth will slow next year, even though the central bank adopted a reasonably hawkish tone and said that October's cut was a "close call."
U.S. short-term interest rate futures are pricing in a 25 basis point Fed cut to 4.25 percent on Dec. 11 and are even giving a small chance of a 50 basis point move.
$1.50 for a Euro?
The euro hit a record high of $1.4873, according to Reuters data, bringing its year-to-date gains to around 12.5 percent. It also set fresh all-time highs against the ECB's trade-weighted basket of 24 currencies at 111.77.
So far European policymakers and politicians have been less vocal about the euro's rise than they were during its 2004 rally, in part because economic growth has held up.
Germany's export industry could cope with the euro at $1.50, the head of BGA exporters' group was quoted as saying on Thursday.
But there are some notes of concern about euro's levels.
Chief executive of Daimler Dieter Zetsche said the German car and truck maker would have to boost productivity even further to offset FX developments, and German Chancellor Angela Merkel said the strong euro could pose difficulties for exporters.
With the United States marking the Thanksgiving holiday on Thursday and Japan shut on Friday, volumes were likely to remain subdued into the end of the week, potentially exacerbating market volatility.
"Last year the market took advantage of the low liquidity environment to drive euro/dollar above $1.30 on the Friday following the Thursday (U.S. Thanksgiving) holiday," RBC Capital Markets said in a research note.
This time, "$1.50 looms as an equally large psychological magnet as did $1.30."