The dollar slid against the euro and yen on Tuesday and hit an all-time low point against the safe-haven Swiss franc, under pressure from deadlock over the US debt limit, traders said.
In early London deals, the single currency managed a brief rise above $1.45 before trading at $1.4474, up from $1.4375 late in New York on Monday.
The dollar meanwhile slumped to a four-month low level of 77.89 yen in Asian deals. In later London trade, it stood at 78.14 yen, down from 78.31 yen in New York.
"The foreign exchange market seems to be losing faith that the US Congress will reach an agreement to raise the debt ceiling and cut public spending by the August 2nd deadline. This has caused a sell-off in the dollar across the board," said Kathleen Brooks, an analyst at trading group Forex.com.
US President Barack Obama addressed the nation in a prime time TV speech on Monday in which he warned that the current debt impasse could have grave consequences.
Failure to compromise, he said, "would risk sparking a deep economic crisis -- one caused almost entirely by Washington."
In reaction, the Swiss franc broke new grounds against the greenback on Tuesday, with the currency being quoted at 0.7998 francs for a dollar and breaching the barrier of 0.80 francs for the first time.
The dollar "has been weighed by uncertainty over the US debt ceiling talks and concern over a possible credit downgrading," said Gen Kawabe, dealer at Chuo Mitsui Trust and Banking.
Congressional Democrats and Republicans have made no substantial progress towards a unified plan to cut the deficit and raise the debt ceiling by a August 2 deadline.
While markets in general expect officials to resolve their differences in time, the continued impasse has raised uncertainty over whether the US can keep its triple-A credit rating.
Obama warned that the Republicans' unyielding approach to the US debt crisis was a "dangerous game" and urged Americans to press for compromise.
With a potential US default looming, Obama appealed to Americans to "make your voice heard."
Elsewhere, the pound was mixed as official data showed Britain's economy grew by 0.2 percent in the second quarter, broadly in-line with expectations. However gross domestic product (GDP) slowed compared with the first quarter, when output expanded by 0.5 percent.
On Tuesday in London, the euro changed hands at $1.4474 against $1.4375 late in New York on Monday, at 113.12 yen (112.60), £0.8836 (0.8828) and 1.1613 Swiss francs (1.1580).
The dollar stood at 78.14 yen (78.31) and 0.8024 Swiss francs (0.8056).
The pound was at $1.6377 (1.6278).
On the London Bullion Market, gold prices fell to $1,611.20 an ounce from $1,613.50 on Monday.