The dollar is losing ground after Moody's warned that it could cut the U.S. debt rating if politicians can't get a deal done on raising the nation's debt limit.
If no deal is reached, the current debt limit could soon constrain government borrowing and its ability to pay its bills.
Meanwhile, reports released Thursday showed that the U.S. economic recovery is still weak. There was a modest increase in retail sales in June and slight improvement in how many people sought jobless benefits last week.
The head of the Federal Reserve said Wednesday that the central bank may resume buying bonds if the economy stagnates. That could keep interest rates low, hurting the dollar's investment appeal.
The euro is up to $1.4230 in morning trading from $1.4151 late Wednesday. The dollar is weaker against the British pound and unchanged versus the Japanese yen.