The euro remained under pressure ahead of the weekend meeting of G8 finance ministers in Japan. Market players keen to see whether the group will back the United States' efforts to strengthen the dollar. Recent talk from Treasury secretary Henry Paulson and Federal Reserve ratesetters has signalled the U.S. is determined for the greenback to appreciate to bring import price inflation under control.
Japanese finance minister Fukushiro Nukaga has hinted foreign exchange issues will be high on the weekend's agenda, although analysts are doubtful ministers would go as far as to sanction intervention in the currency markets.
"We believe that there could be stronger language on forex in the communique but it is likely to stop short of indicating that intervention is likely, which could still be enough to boost the dollar," said Mitul Kotecha, head of currency research at Calyon.
But ahead of the meeting focus is likely to be on U.S. inflation figures, both of which are expected to come in on the strong side.
The yen was lower following the Bank of Japan's decision to leave interest rates unchanged at 0.5%.
The pound was weaker, with investors still concerned about the prospect of stagflation in the UK and uncertainty about which direction the next move in interest rates will be.