The dollar fell on Friday against a trade-weighted basket of currencies and is poised for a fourth consecutive weekly loss, as investors mulled over the impact of rising political uncertainty on growth before key jobs data later in the day.
The ailing greenback has come under pressure this week from fresh political turmoil in Washington, with news that a grand jury will investigate allegations of Russian meddling in November's US election.
The dollar's decline has exacerbated leveraged bets in recent weeks as hedge funds have increasingly borrowed in the US currency to invest in global assets such as the euro-area stocks and bonds.
Broad market positioning data for the week of July 25 showed short bets against the dollar swollen to their highest levels since a "taper-tantrum" peak in early 2013 while latest data on inflows into global equity and emerging market debt funds are at multi-week highs.
"The dollar has been overvalued for a while and that is being unwound gradually because of greater risk appetite and this may have more room to go," said James Kwok, head of currency management at Amundi Asset Management in London.
Beleaguered dollar bulls looked to the US jobs report due on Friday to turn its fortunes around, at least in the short term. Economists polled by Reuters expect US employers to have added 183,000 jobs in July.
The dollar index was a shade lower at 92.81 and is set to fall 0.5 per cent this week. It fell to a 15-month low on Wednesday to 92.548.
The greenback has also suffered at the hands of a strengthening euro, which hit 2-1/2-year highs this week, boosted by dollar weakness but also the view that the European Central Bank is set to tighten policy or at least announce a shift, amid a brightening economic picture.
The euro was flat at $1.1869, within striking distance of a January 2015 high of 1.1910 scaled on Wednesday.
*Reuters