The dollar climbed against the euro on Thursday as dealers tracked the progress of US President Barack Obama's stimulus package to help get the recession-hit US economy back on track, analysts said.
The European single currency fell to 1.3062 dollars from a level of 1.3164 dollars reached in New York late on Wednesday.
Against the Japanese currency, meanwhile, the dollar dipped to 90.04 yen from 90.27 yen.
"The progress through the House of Representatives of the package with a comfortable margin will be cheering US sentiment but certainly no one will be under the illusion that this is the turning point for the economy," said analyst James Hughes at CMC Markets in London.
"With US durable goods orders due later this afternoon there's certainly no shortage of potential for a quick reversal to be seen if the numbers fall short of expectations."
Handing Obama his first big win, the divided House of Representatives on Wednesday approved a huge stimulus bill he touted as vital to saving the US economy from collapse.
But the 819-billion-dollar (627-billion-euro) measure passed without a single vote from Obama's Republican foes.
Obama said he was willing to make changes to the legislation as it moves through the Senate, after the House of Representatives approved the measure by a vote margin of 244-188.
The euro was also pulled lower on Thursday after an EU survey showed that European consumer and business confidence sank to a record low in January.
The European Commission's economic sentiment indicator for the 16 countries sharing the euro fell to 68.9 points in January from 70.4 points in December, hitting the lowest level since the survey began in January 1985.
Players were also digesting the outcome of a US Federal Reserve meeting which gave a glimmer of hope on an economic revival by at least the end of the year, noted NAB Capital strategist John Kyriakopoulos.
The Federal Open Market Committee said it "anticipates that a gradual recovery in economic activity will begin later this year, but the downside risks to that outlook are significant."
The central bank left its key lending rate unchanged in a range between zero and 0.25 percent but hinted at new measures including a possible plan to buy up Treasury securities.
The Fed, however, stopped short of giving fresh clues on a "bad bank" plan initiated by Obama that would unload toxic assets from banks' balance sheets in an effort to ease a credit crunch.
Elsewhere, the yen bounced as Japanese exporters bought the currency to settle month-end accounts, dealers said.
In London trading, the euro changed hands at 1.3062 dollars against 1.3164 dollars late on Wednesday, at 117.46 yen (118.83), 0.9250 pounds (0.9236) and 1.5077 Swiss francs (1.5154).
The dollar stood at 90.04 yen (90.27) and 1.1557 Swiss francs (1.1512).
