The dollar traded mixed against rival currencies in European deals on Tuesday as the market nervously awaits a US Senate vote on President Barack Obama's economic stimulus plan.
In late morning trade, the European single currency fell to 1.2924 dollars from 1.3002 dollars in New York late on Monday.
Against the Japanese currency, the dollar dropped to 91.14 yen from 91.45 yen on Monday.
The US Senate was on Tuesday set to vote on a revamped economic stimulus bill of more than 800 billion dollars. Obama warned Congress of "catastrophe" if it did not pass the package this week.
But among investors there were also concerns about the cost of the measures.
"Investors are starting to baulk at digesting the huge increase in Treasury note and bond issuance to fund the surging US budget deficit," said NAB Capital strategist John Kyriakopoulos.
The United States is expected to sell a record 67 billion dollars of new debt this week to fund stimulus measures, he noted.
Analysts warn the US budget deficit could top one trillion dollars this fiscal year as the recession prompts massive federal bailouts of banks and automakers.
Markets were also waiting for a speech later in the day by Treasury Secretary Timothy Geithner, who was expected to unveil plans to overhaul the government's 700-billion-dollar financial sector rescue package.
The plan is expected to include a "bad bank" entity that reports say is likely to join the government and the private sector in purchasing uncollectible loans from financial institutions.
The euro was meanwhile weighed down by a report that Russian banks and companies are planning to ask foreign banks to reschedule loans worth 400 billion dollars, dealers said.
The head of the Association of Russian Banks, Anatoly Aksakov, told Japan's Nikkei business daily that the association had submitted a request to Moscow. If approved, the government would commence negotiations with lenders.
The news weighed on the euro as many European banks have exposure to Russia, dealers said.
In London trade on Tuesday, the euro changed hands at 1.2924 dollars against 1.3002 dollars late Monday, at 117.78 yen (118.90), 0.8733 pounds (0.8725) and 1.5038 Swiss francs (1.5138).
The dollar stood at 91.14 yen (91.45) and 1.1636 Swiss francs (1.1638).
The pound was at 1.4798 dollars (1.4898).
On the London Bullion Market, the price of gold increased to 895.50 dollars an ounce from 895 dollars late on Monday.
