The euro dropped against the dollar on Tuesday as risk appetite eased amid renewed concerns surrounding the Greek debt crisis and the possibility that China will raise its key interest rate, analysts said.
In London deals, the European single currency fell to $1.4474 from $1.4539 late in New York on Monday. Against the yen, the dollar gained to 81.11 yen from 80.80 yen.
"After yesterday's quiet trading session caused by the US's 4th July holiday, investors have come back in today and decided to keep away from risky assets," said Kathleen Brooks, research director at trading group Forex.com.
"This may be a delayed reaction to yesterday's news from rating agency Standard and Poor's that the current plan being hashed out between eurozone authorities and banks over a voluntary rollover of Greek bond holdings would constitute a default."
S&P said on Monday that recent proposals for a new Greek bailout, under which private sector banks would rollover their exposure, would be tantamount to a partial debt default, the very outcome officials are trying to avoid.
There is concern that a default could spread domino effects across the eurozone and the global financial system.
The market was meanwhile digesting comments made on Monday by The People's Bank of China, which said that inflationary pressures "are still high" while the economy continues to grow at a steady and relatively fast pace.
Two local papers on Tuesday interpreted the PBoC statement to mean that a hike in interest rates could be imminent.
The greenback was meanwhile also buoyed by speculation of increased fund inflows back to the United States, dealers said, following a report about a corporate tax holiday on the foreign profits of US firms.
Bloomberg said a reduction in income tax on repatriated profits being debated by Congress could lead to as much as $700 billion in flows back to the United States.
"The dollar was broadly bought against other major currencies in the wake of a the report," Tomohiro Ishikawa, dealer at Chuo Mitsui Trust and Banking, told AFP.
The US market was closed Monday for the July 4 Independence Day holiday.
In London on Tuesday, the euro changed hands at $1.4474 against $1.4539 on Monday, at 117.41 yen (117.48), £0.9008 (0.9040) and 1.2222 Swiss francs (1.2329).
The dollar stood at 81.11 yen (80.80) and 0.8444 Swiss francs (0.8400).
The pound was at $1.6068 (1.6083).
On the London Bullion Market, gold prices climbed to $1,496.95 an ounce from $1,495 on Monday.