The dollar was broadly higher on Tuesday as investors sold currencies associated with risk on concerns about the banking system while looking ahead to data on the outlook for economic growth.
The euro fell on a German media report the majority owners of WestLB [WDLG.UL] were threatening not to support the stricken German landesbank's requirement for more capital, citing financial sources.
Some traders also cited a report published on Monday from U.S. ratings firm Standard and Poor's, which raised concerns about the health of some major banks.
Data on Tuesday showed Germany's economy grew 0.7 percent in the third quarter, unchanged from a preliminary estimate.
Markets awaited the key German Ifo sentiment data, due at 0900 GMT and expected to show a modest improvement.
The Ifo data will be the focus, and it should be consistent with a gradual improvement in the German economy, but even then it should have a limited impact on the euro, said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.
Rallies on risk assets are showing diminishing returns, and major currencies are looking stretched against the dollar.
Asian shares were in the red on Tuesday, with the Nikkei average .N225 down 0.8 percent after a higher close on Wall Street on Monday. European shares .FTEU3 and S&P futures SPc1 were also slightly down.
At 0824 GMT, the euro was down 0.4 percent on the day at $1.4905. It hit a one-week high of $1.5001 on Monday.
Traders cited options with a strike price of $1.5000 and $1.5050 set to expire later in the day.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.3 percent at 75.379 .DXY.
Some investors buy the dollar, seen as a safe haven, against other higher-yielding currencies and sell assets like stocks and commodities when economic optimism diminishes.
The yen was also broadly firmer, with the dollar down 0.3 percent to 88.63 yen JPY=, having touched a six-week low of 88.56 yen on trading platform EBS.
The euro fell 0.8 percent to 132.08 yen EURJPY=.
Trade was expected to be thin, exaggerating price moves ahead of the U.S. Thanksgiving holiday on Thursday.
With a holiday-shortened week this week, there are still investors who want to close their dollar-short positions, said Yuji Saito, head of the FX sales department at Societe Generale in Tokyo.
Traders also focused on U.S. economic indicators later in the day, including revised U.S. gross domestic product for the third quarter and housing market data. ECONUS
The Federal Reserve will release minutes of its Nov. 3-4 meeting at 1900 GMT, which will include economic projections for the next two years. Markets will particularly focus on the Fed's forecasts for unemployment.
Commodity-linked currencies weakened as investors shied away from risky assets. The Australian dollar fell 0.7 percent to $0.9171 AUD=D4, off a 15-month high of $0.9407 last week.
The New Zealand dollar was down 1.0 percent to $0.7253, having risen more than 1 percent on Monday.