The currency also slid versus the yen on concern home-loan defaults will climb, adding to $967 billion of losses at financial institutions that led to a government bailout of Citigroup Inc. U.S. data may show home resales dropped the most in a year in October, fueling expectations the Federal Reserve will add to last month's two interest-rate cuts to spur growth.
The dollar dropped to 95.29 yen as of 7:10 a.m. in London from 95.94 yen late in New York on Nov. 21. The U.S. currency declined to $1.2643 per euro from $1.2587. The euro fell to 120.45 yen from 120.71 yen. Foreign-exchange movements may be exaggerated because trading volumes are lower than usual due to a Japanese public holiday today.
The ICE's Dollar Index, which tracks the greenback against the currencies of six major trading partners, slid 1 percent to 87.346, after recording its highest closing level since April 2006 at the end of last week.
Against the dollar, the Swiss franc climbed to 1.2172 from 1.2254 and the British pound was little changed at $1.4926.
The Japanese currency rose 3.2 percent to 15.86763 versus South Korea's won, 1.5 percent to 59.79 per Australian dollar and 1.3 percent to 50.77 against New Zealand's dollar.
Japan's benchmark interest rate of 0.3 percent compares with 4 percent in South Korea, 5.25 percent in Australia, 6.5 percent in New Zealand and 3.25 percent in Europe.
In a carry trade, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the two. The risk is that currency market moves erase those profits.