The dollar climbed against the euro and steadied versus the yen in European trading on Wednesday, the eve of a vital G20 meeting and an expected record-breaking call on eurozone interest rates.
Markets also reacted to news that unemployment in the 16 countries using the euro rose in February to 8.5 percent to hit the highest level in close to three years, according to official EU data on Wednesday.
In London foreign exchange trade, the European single currency fell to 1.3215 dollars from 1.3251 dollars late in New York on Tuesday.
Against the Japanese currency, the dollar dipped to 98.97 yen from 99.01 yen on Tuesday.
"Clearly the G20 meeting is plastered across the headlines and although some suggest this won't solve the current financial problems, it's going to be the posturing and detail that stands to influence specific currencies," said CMC Markets analyst James Hughes.
Worries about the outlook of the global economy are weighing on investor sentiment as world leaders from 20 major industrialised and developing economies prepare to meet in London on Thursday.
The Group of 20 summit comes just days after the OECD group of leading global economies and the World Bank issued bleak forecasts for world economic momentum.
Elsewhere, the euro was down against the dollar as the European Central Bank is expected to cut its key interest rate to an all-time low on Thursday and may venture onto entirely new ground as it seeks ways to ease a deepening recession.
It is "already clear to everyone that the refi (refinancing) rate will go lower but not much lower" than the current level of 1.50 percent, UniCredit chief eurozone economist Aurelio Maccario said.
"The focus has now shifted to the type of other unconventional measures the ECB is ready to embark on," he said.
Efforts to pull the 16-nation eurozone out of its first recession are set to take the ECB further into exceptional measures known as quantitative easing, essentially the creation of money to boost economic activity.
The US Federal Reserve, Bank of England and Bank of Japan have blazed a trail by unveiling schemes costing trillions of dollars to buy government and corporate debt and high-risk, mortgage-backed securities.
In London trade on Wednesday, the euro was changing hands at 1.3215 dollars against 1.3251 dollars late on Tuesday, 130.54 yen (131.23), 0.9161 pounds (0.9251) and 1.5113 Swiss francs (1.5096).
The dollar stood at 98.97 yen (99.01) and 1.1458 Swiss francs (1.1393).
The pound was at 1.4398 dollars (1.4324).
