The dollar headed for a third weekly decline against the euro as the U.S. housing slump and record oil prices slow growth in the world's biggest economy.
The currency also dropped versus the yen and traded near the weakest level in a month versus the Swiss franc as an industry report showed U.S. home sales fell.
The dollar fell 14% against the euro in the past 12 months as the U.S. central bank slashed its benchmark interest rate to 2%, from 5.25% in September. The European Central Bank has kept its target rate at 4%.
U.S. home resales declined 1% to a 4.89 million annual rate in April, the National Association of Realtors said today. The median estimate in a survey was for a drop of 1.6%.
Futures on the Chicago Board of Trade indicate a 40% chance the Fed will increase the target rate for overnight lending between banks by a quarter-percentage point in December. There's a 92% chance policy makers will hold the rate at 2% at their next meeting on June 25.
The euro headed for its biggest weekly gain in two months against the dollar and a second weekly advance versus the yen on speculation the EU-countries that share the currency will withstand record high oil prices, lessening the need for a reduction in interest rates. The Ifo institute said its business climate index unexpectedly rose to 103.5 in May from 102.4 in the previous month.
The yen rose against most major currencies as rising oil prices hurt risk appetite. Investors buy the yen on speculation trades funded in the Japanese currency are pared when risk appetite falls.