The dollar reversed gains after trading near a one-month high it hit in Asian trade against a currency basket while the euro reversed earlier losses to trade higher.
Uncertainty over whether and when Spain will apply for a bailout and downbeat comments on the euro zone economy from European Central Bank President Mario Draghi had weighed earlier on the euro, which fell to 10-day lows versus the dollar and the yen.
The euro [EUR= 1.2905 0.0021 (+0.16%) ] was last up 0.2 percent at $1.291.
"The market had factored in that the ECB had gone to all these lengths to resurrect the bond-buying plan with Spain in mind, and Spain just hasn't taken the bait as yet," Standard Bank's head of G10 currency research Steve Barrow said.
"If Spain had made that request when the euro was strong and bond yields had already come down quite a bit, positive momentum could have pushed the euro dollar on to $1.35. The problem now is that maybe their chance has been missed, and instead perhaps Spain will now not do anything until yields start to move up."
The euro has slipped since hitting a high of $1.3072 on Friday but remains above chart support at its 200-day moving average of $1.2822 and the Oct. 1 low of $1.2803. A break below there would leave it vulnerable to more falls.
The euro was last up 0.3 percent against the yen at 101.13 yen [EURJPY= 101.07 0.27 (+0.27%) ], having earlier hit a 10-day low of 100.43 yen.
Draghi said the region faced a long road to recovery, despite the ECB's plan to buy the bonds of indebted euro zone countries, and that there was no alternative to budget austerity.
The dollar index [.DXY 79.86 -0.09 (-0.11%) ] was down 0.1 percent at 79.85, having earlier hit 80.186, its strongest since Sept. 11.
Appetite for currencies seen as higher risk has been hurt by worries over the impact of potentially weak company earnings on equities, with European shares last down 0.3 percent.
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"The big question is whether euro/dollar can break below $1.28, which could support momentum to the downside. But this will be difficult unless we get very negative equity markets," said Niels Christensen, currency strategist at Nordea in Copenhagen.
Even if equities turn higher, uncertainty about the euro zone was expected to weigh on the euro and limit any gains.
Unease over Spain's future, which has pushed investors back to less risky debt despite the low yields on offer, was reflected in strong demand in a 3.1 billion euro sale of five-year German bonds, which are seen as a safe haven investment, on Wednesday.
The International Monetary Fund on Wednesday on Wednesday urged European policymakers to deepen the financial and fiscal ties within the euro area with some urgency.
As well as concerns over Spain, investors are fretting about whether Greece will agree terms with its international lenders for the next tranche of funds needed to keep the country afloat.
German newspapers attacked "ungrateful" Greeks for the hostile public reception they gave Angela Merkel in Athens and some criticised the Chancellor's generosity for promising they would stay in the euro zone.
Merkel reaffirmed her commitment to keeping Greece in the euro, but offered Prime Minister Antonis Samaras no concrete relief ahead of a report next month by the "troika" of international creditors on Greece's progress on savings targets.
The Australian dollar [AUD= 1.0248 0.0048 (+0.47%) ] meanwhile rose against both the euro and the dollar after a successful sale of Australian long-dated bonds boosted demand. It was last up 0.6 percent against the U.S. dollar at $1.0259, while the euro [EURAUD= 1.2589 -0.003 (-0.24%) ] was down 0.4 percent at A$1.2574.
