The dollar neared a two-month high against major currencies, pausing after rallying due to a hold in sterling and the euro's fall.
The euro fell to a three-month low on Wednesday as expectations solidified for an ECB attack on monetary policy next week.
The British pound sank on Tuesday after weak lending data added to concerns over a European election win for the anti-EU UKIP party.
The euro recovered early losses on Monday after European election results saw gains for Eurosceptics but did not deliver a serious domestic blow to some European governments.
The euro fell to a three-month low against the dollar after a soft German business sentiment survey added pressure on the ECB.
Robust expansion in Germany led the euro off lows, but growing expectations the ECB will ease monetary policy next week kept gains muted.
The Federal Reserve released minutes from its last meeting, where it discussed the procedures for hiking interest rates.
The Australian dollar fell more than half a percent, on a slide in prices of iron ore, one of the country's biggest exports.
The dollar teetered near a three month low against the yen on Monday, hit by falling U.S. interest rates.
The dollar extended losses against the yen, trading near two month lows and putting it on course for a big weekly loss.
The euro was back against the dollar on Friday, rebounding from a 2-1/2-month trough as investors booked profits on bearish positions.
The euro bounced back thanks to the Bank's of England's loose monetary policy and Asian central banks.
The euro steadied against the dollar on Wednesday and rebounded from a 16-month trough against the British pound.
Jesper Bargmann, Head of Trading Markets, Singapore, Nordea, explains why the Australian dollar has managed to stay resilient following the government's federal budget.
Traders borrowing U.S. dollars to fund investments in other currencies should beware, with analysts expecting the greenback to strengthen.
Sean Callow, Senior Currency Strategist at Westpac Bank, says Australia's federal budget is unlikely to affect growth and hence, it will have little impact on the currency.
Prime Minister Tony Abbott's government is expected to unleash a slew of measures to slim down the budget deficit. CNBC's Matthew Taylor tells you what to expect from the federal budget.
The euro fell against sterling on growing bets the European Central Bank and the Bank of England will take opposite courses of action.
The euro slid after strong words from European Central Bank chief Mario Draghi halted its march to a 2-1/2 year high.
The euro slid further in early trade in Europe on Friday after strong words from European Central Bank chief Mario Draghi that halted its march this year to a 2-1/2 year high.