The euro fell against the dollar on Monday, weighed down by a lack of concrete progress on a financial aid package for debt-strapped Greece.
Concerns about further tightening by Chinese monetary authorities also stoked worries about a global recovery, denting investors' appetite for risk and driving higher-yielding currencies like the Australian dollar lower.
The European Union's executive said on Monday it was ready to propose a framework that could be used to aid Greece, but France and Germany continued to show reluctance and officials signaled that no figure would be put on the amount of help that could be extended.
The Greek debt crisis will continue to hang over the euro like the Sword of Damocles, said Chris Gaffney, vice president at EverBank World Markets, in St. Louis, Missouri.
Only time will tell if the Greeks will be successful in their efforts to refinance their debts, he added. Until some other event or crisis draws (currency speculators') attention, the euro will continue to be fairly volatile.
In afternoon trading, the euro was down 0.7 percent at $1.3667, retreating from a four-week high just shy of $1.3800 hit on Friday.
Traders said there were reports in the market of large option-related sell orders on the approach to $1.3800, limiting any upside momentum on the euro.
The ICE Futures' dollar index <.DXY> traded up 0.5 percent against a basket of currencies at 80.261 as weakness in global stock markets boosted demand for the safe-haven greenback.
Comments by Chinese Premier Wen Jiabao on Sunday, who rejected calls by the international community to revalue the yuan, saying its currency is not undervalued, unsettled the market, analysts said.
Also on Monday, Moody's said the credit ratings of the United States, UK, France, Germany and Spain were safe but risks to their top-notch status had grown.
FED MEETING LOOMS
Investors also stayed cautious ahead of monetary policy meetings by the Federal Reserve and Bank of Japan this week.
The U.S. central bank is expected to reiterate its pledge to keep interest rates very low for an extended period at the end of its meeting on Tuesday, but market participants will closely watch the number of dissenters.
Kansas City Fed President Thomas Hoenig dissented at the Fed's last meeting, saying conditions had improved sufficiently to warrant dropping the extended period phrase.
There's clearly a growing debate within the Fed as to how long that language should be maintained, said Fergal Smith, managing market strategist, Canada at Action Economics in Toronto. If another Fed official dissented or the accompanying statement showed a more hawkish or less dovish slant, the dollar could benefit, he added.
Against the yen, the dollar fell 0.1 percent to 90.34 yen.
Sterling was the day's biggest mover, falling nearly 1.0 percent against the dollar to $1.5039 after hitting session lows of $1.5019 on persistent worries about a weak UK economic outlook and on uncertainty ahead of a general election expected in May.
The Bank of Japan starts a two-day meeting on Tuesday at which, sources said, it is leaning toward easing monetary policy again.
The euro also hit a low of 1.4509 Swiss francs, according to Reuters data, its weakest level in more than 16 months. It was last at 1.4527 francs, down 0.2 percent.
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by Kenneth Barry)