Hopes that U.S. politicians are closer to a budget deal pushed traders to sell the dollar and buy riskier currencies.
Traders have been worried about the U.S. "fiscal cliff," a series of tax increases and government spending cuts set to kick in at the beginning of next year unless the White House and Congress reach an agreement on reducing the budget deficit before then. Economists believe that could send the U.S. back into recession.
In recent days several participants in the talks have expressed optimism that a deal can be reached. Riskier currencies such as the euro tend to rise when traders are more willing to embrace risk.
The euro rose to $1.2972 in late trading Thursday from $1.2932 late Wednesday.
The British pound rose to $1.6038 from $1.6015.
The dollar fell to 0.9280 Swiss franc from 0.9307 Swiss franc and to 99.23 Canadian cents from 99.26 Canadian cents.
The dollar rose to 82.15 Japanese yen from 81.90 yen.