The euro also benefited from data showing German industrial orders data rose 3.2 percent in June, surpassing expectations thanks to strong foreign demand.
Trading was choppy, however, with investors cautious ahead of key U.S. non-farm payrolls figures on Friday, which are expected to provide near-term direction for the dollar.
A senior IMF official told Reuters that Greece would receive a second tranche of international aid thanks to an impressive start on its austerity plan, and that it must now shift to drastic reforms to return to growth.
Coupled with strong demand at a Spanish auction of three-year debt that drove down the yield, this helped push the euro higher, with traders adding that it had earlier held above support around $1.3120.
The euro is getting a boost from the Spanish auction and reacting to the IMF comments on Greece, but trade will probably be choppy going into tomorrow's payrolls data, said Paul Robson, currency strategist at RBS.
At 4:18 a.m. ET, the euro rose 0.4 percent to $1.3208, having earlier dropped as low as around $1.3120.
The session low took the single currency below $1.3125 against the dollar -- the 38.2 percent retracement of the November to June decline -- and traders said a close below there could prompt further falls.
Falls versus the euro helped push the dollar index .DXY into negative territory. It was down 0.3 percent at 80.675, taking it back just below its 200 day moving average around 80.769.
The dollar had started the day in the black as investors unwound bets against the currency thanks to some better signs on the economy ahead of key U.S. non-farm payrolls figures on Friday.
An ADP report on Wednesday showed the U.S. added 42,000 jobs in July. Coupled with encouraging service sector data, that relieved some of the recent pessimism about the world's biggest economy, but traders said more good news was needed to overturn negative dollar sentiment.
Economists polled by Reuters estimated that Friday's data would show U.S. non-farm payrolls fell 65,000 in July as layoffs of federal census workers continued.
No one will want to be short of dollars if there is a positive outcome, said Niels Christensen, currency strategist at Nordea.
But nothing has changed the negative dollar environment.
Against the yen, the dollar fell 0.2 percent to 86.08 yen, having bounced from an eight-month low of 85.32 yen hit on Wednesday.
Traders said its ability to hold above the psychologically key 85 yen level lightened the risk of dollar/yen dropping to a 15-year low below 84.82 yen.
The European Central Bank and the Bank of England announce policy decisions on Thursday, but both are fully expected to leave interest rates on hold at record lows of 1.0 percent and 0.5 percent respectively.
Analysts said that ECB President Jean-Claude Trichet may be upbeat in a subsequent press conference, given recent successful bank stress tests and solid European bank earnings, but that this is unlikely to be market-moving.
Elsewhere, the New Zealand dollar fell 1 percent against the U.S. dollar after weak local jobless data while Canadian dollar-positive M&A speculation lifted the Canadian currency to a near three-month high versus the greenback.