The dollar traded mainly higher Wednesday, supported by hopes that the worst of the credit crunch is over and that the US economy will avert a major economic downturn.
Traders looked ahead to policy meetings at the European Central Bank and the Bank of England, which are expected to leave interest rates unchanged but may signal economic softness that might lead to rate cuts in the future.
The euro fell to 1.5395 dollars at 2100 GMT from 1.5530 in New York late on Tuesday.
The dollar eased slightly against the Japanese unit to 104.66 yen from 104.75 yen.
US nonfarm business productivity increased by an annual rate of 2.2 percent in the first quarter, higher than expected and boosting hopes that the world's largest economy can weather its current crisis.
Comments from a Federal Reserve member also suggested US interest rates would not go lower and could even rise at some point soon, said analysts.
"The dollar opened higher after 'hawkish' comments from Federal Reserve Bank of Kansas City President Thomas Hoenig yesterday, stating that higher inflation risks may require 'significant' monetary policy tightening to reduce it," said Bob Kozak at Alaron Trading.
"Prices continued higher after a combination of weaker economic data from the EU and UK and a better than expected increase in the nonfarm productivity report."
The US currency was "supported by market optimism that the credit crunch is starting to ease to some extent," said Kenichi Yumoto at Societe Generale.
The dollar's gains were capped by jitters about crude oil prices, which hit new record highs on Wednesday.
Ahead of the ECB rate decision, official data showed consumers in the 15 nations sharing the euro had reined in spending during March, confounding hopes that they would keep their wallets open and so support a weakening economy.
"Dollar bulls remain in full control at the start of this week as focus in currency markets shifts away from the troubles in the US and squarely towards the economic slowdown across the pond," said Boris Schlossberg at Forex Capital Markets.
The volume of retail trade in the eurozone fell O.4 percent in March from February and slumped 1.6 percent over 12 months, the European Union's Eurostat data agency said.
"Although consumer confidence has softened lately it remains much stronger than in the US or the UK," said Capital Economics analyst Jennifer McKeown.
Thursday's ECB decision and president Jean-Claude Trichet's news conference "will draw significant attention," said Camilla Sutton at Scotia Capital.
"We would expect his hawkish tone to continue as inflation is still well above 3.0 percent, oil has reached a new record high and wage pressures continue; however he will most likely also point out the increasing risks to growth going forward. It will be a fine balance for Trichet to communicate and market reaction could be significant."
In late New York trade, the dollar stood at 1.0546 Swiss francs from 1.0515 Tuesday.
The pound was at 1.9532 dollars after 1.9735.
Simon Derrick at Bank of New York Mellon said weak data on British consumer confidence and manufacturing output put sterling under pressure.
"This deterioration in the UK economy brings with it the likelihood of a significant decline in the pound's fortunes," he said.
"We believe that the pound-dollar trade is looking increasingly exposed to a sharp sell-off developing."
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