The euro traded in a wide range Thursday after the European Central Bank kept interest rates unchanged, as was widely expected.
The common currency last traded down 0.46 percent against the dollar at $1.2103 after trading higher earlier in the day. The ECB also reaffirmed its stimulative monetary policy stance.
ECB President Mario Draghi said "underlying strength" in the euro zone's economy continued to underpin the bank's confidence despite signs of "moderation" in recent weeks.
He added an "ample degree of monetary stimulus" remained necessary over the coming months.
"There was an attempt to rally it and the rally ran out of steam," said Marc Chandler, a currency strategist at Brown Brothers Harriman, who noted the euro gave back its gains after a 5.2 billion euro option expired. "Once the Draghi press conference was over, the option passed and people went back to what they want to do — liquidating record levels of long euros in the futures market."
So far in 2018, the euro has trimmed gains to be up about 1 percent so far this year compared to more than 4 percent at the beginning of February.
Traders are also beginning to question whether the dollar is really at risk of a long structural decline - as posited by many - when the Federal Reserve will be raising rates faster than other major central banks.
In recent days the euro has sold off heavily and a drop below $1.2154, its March 1 low, would leave it at its weakest since mid-January and erasing most of its 2018 gains.
Elsewhere, Sweden's crown, one of the worst performing G10 currencies in 2018, fell to its lowest since late 2009 after its central bank postponed monetary tightening until the end of the year, citing weak inflation.
The crown fell as much as 0.6 percent to 10.485 crowns per euro before recovering slightly. It was also down half a percent against the dollar, its lowest since mid-2017.
The dollar index last traded up 0.45 percent at 91.58.
The rise in yields, driven by worries about the growing supply of U.S. government debt and inflationary pressures from increasing oil prices, has caused U.S.-Japan and U.S.-German yield differentials to widen further in the dollar's favour, leaving the yen and the euro lower.
"As markets become less confident about the European growth outlook, at the same time as looking for the U.S. to benefit from late-cycle fiscal easing, I shouldn't really be surprised if we reverse pretty much all of January's euro/dollar spike," said Kit Juckes, chief FX strategist at Societe Generale.
Against the yen, the dollar set a 2-½-month high of 109.49 but later eased to 109.37 yen, down 0.04 percent.
The dollar also fell marginally against the Australian and Canadian dollars after its recent gains.
—With reporting from CNBC's Patti Domm and Sam Meredith.