NEW YORK (MarketWatch) -- The U.S. dollar rose against the euro and other major currencies Wednesday, clawing back some of the previous day's sharp losses.
The dollar index , which tracks the U.S. unit against a basket of six major currencies, rose 0.5% to 85.57, up from 84.871 in late North American trade Tuesday.
"The outlook for the (U.S. dollar) remains one of range-bound stability despite exceptionally high levels of financial market volatility," said Michael Woolfolk, a currency strategist at Bank of New York Mellon.
The euro slipped 1% to $1.2929 versus the dollar from $1.3049. Against the Japanese currency, the euro dropped 1.2% to 122.90 yen from 124.39 yen.
The European Union proposed a 200 billion euro ($260 billion) effort Wednesday that would see member states coordinate attempts to provide a fiscal jolt to the region's stagnating and shrinking economies. See full story.
The proposal aims to offer the EU's 27 nations a "toolbox" of measures that can be tailored to individual economies.
The British pound fell 1.3% to $1.5252 after surging to $1.5460 Tuesday.
The dollar, however, was marginally lower against the Japanese currency, off slightly to 95.09 from 95.32 yen late Tuesday.
Meanwhile, a number of economic reports were released in the U.S. Wednesday.
The Labor Department reported that first-time claims for state unemployment benefits fell by 14,000 to 529,000 in the week ending Nov. 22. The four-week average of those claims rose to a 25-year high of 518,000.
Separately, the Commerce Department said that consumer spending fell 1% in October, the largest decline since September 2001. The result matched analysts' expectations.
Also, orders for U.S.-made durable goods fell 6.2% in October, the largest decline in two years, the Commerce Department estimated Wednesday, as orders for transportation goods fell 11.1%.
The dollar and the Japanese yen, which have both benefited from de-leveraging, liquidation and safe-haven flows during increased bouts of risk aversion, fell Tuesday after U.S. officials pledged to provide another $800 billion in liquidity to ailing credit markets. Read about the Fed measures.
Strategists at Commerzbank said the resolve demonstrated by U.S. authorities on Tuesday "raised hopes in the market that the crisis can be overcome with government help."
But they cautioned that such enthusiasm could prove fragile.
"As the example of multiple other Fed and Treasury programs have taught, disillusionment could follow later," the strategists wrote.
The dollar also fell Tuesday in response to funding worries, strategists said, tied to the expansion of the Fed's balance sheet.
