The European Central Bank kept rates on hold at 4 percent but suggested it would raise borrowing costs again in coming months to fight inflation. The dollar is losing its allure to yield-hungry investors as rates rise overseas.
Many traders remain bearish on the dollar, but with sterling already at 26-year highs and the euro also just short of record peaks against the dollar, some were locking in short-term gains.

"Sterling and the euro have both had a pretty good run, and what we're seeing is that with the Bank of England and ECB out of the way, people are taking some profits," said John McCarthy, director of foreign exchange trading at ING Capital Markets in New York. "The medium-term trend, though, is unchanged."
Sterling was down 0.2 percent at $2.0123, retreating from a peak of $2.0202 hit shortly after the BoE rate rise.
The dollar was up 0.10 percent at 122.85 yen . The Japanese yen, the world's lowest-yielding major currency, also hit another record low of 167.29 per euro, according to electronic trading platform EBS.
ECB President Jean-Claude Trichet said on Thursday that he he did not intend to sway the market's expectations about the future path of monetary tightening in the euro zone.
Analysts took this to mean that futures prices indicating a two-in-three chance of an ECB rate hike by September, and a dead certainty of a rise by October, were on the mark.
"The ECB is not going to raise rates in the next month or so, but they will definitely hike them again before the end of the year," said Busch at BMO.
In contrast, the Federal Reserve is expected to keep interest rates on hold until the end of the year, with futures pricing in a one-in-ten chance of a rate cut.
The day's biggest winner was the New Zealand dollar, which climbed 0.45 percent to US$0.7842 after hitting US$0.7881, the highest since the currency was floated in 1985.

(Additional reporting by David McMahon)