"The dollar is starting to leak and now we're seeing oil rising again," said Steven Butler, director of foreign exchange trading at Scotia Capital.
"People were caught long U.S. dollars and now they're starting to bail out."
Earlier the dollar rose versus the euro as an unexpected smaller decline in U.S. nonfarm payrolls in July helped to ease some worries about the overall health of the U.S. economy.
News that U.S. employers eliminated 51,000 non-farm jobs against market expectations for a 75,000 decline in payrolls helped the greenback to cut some losses against the yen.
"The market was bracing itself for an ugly number. The dollar rallied on the data because we didn't get as steep a decline in payrolls as had been forecasted," said Fergal Smith, managing market strategist at Action Economics in Toronto.
"For the dollar, it will be technical for the rest of the day. If $1.5518 (for EUR/USD) is broken, we'll probably see further strength in the U.S. dollar."
The euro's losses also came as data showed euro zone factory activity contracted at its fastest pace in five years in July.
U.S. employers cut non-farm jobs for a seventh straight month in July, pushing the unemployment rate to 5.7 percent from 5.5 percent.
Analysts polled by Reuters had forecast the unemployment rate would rise to 5.6 percent.
"The numbers show a somewhat resilient economy. As a consequence, we're seeing some buying of dollars. In many respects, you're going to require more data before you can confirm this," John McCarthy, director of foreign exchange at ING Capital Markets in New York.
News that manufacturing activity in Australia slowed in July to its lowest level since November 2005, sent the Australia dollar tumbling as low as US$0.9314. It was last lower against the greenback.
Speculation is mounting that the Reserve Bank of Australia could set the tone for lower interest rates after its policy meeting next week.
The New Zealand dollar tumbled to $0.7247 on deepening concerns over the local financial sector after the country's largest fund manager said it was suspending activity in one of its funds.
The kiwi was last down on the day against the U.S. currency.