The dollar has fallen yet again

The turnaround pushed the greenback to a two-month high against the yen, while traders took advantage of the momentum to sell the euro and the pound as well.

The move builds on renewed support for the US currency earlier in the week.

The dollar has been under pressure for months , driving ever lower by rock-bottom interest rates and worries about US deficits.

Record levels

The dollar demand was spurred by news that Japan had raised its security status to the highest level, bolstering security around nuclear facilities and hundreds of other key points around the country.

That was enough to catalyse dollar buyers, taking advantage of the currency's record lows.

The violent swings of recent sessions do not represent a sea-change in market sentiment Barclays Capital

Late trading in New York had the dollar at 109.31 yen, a rise of almost 2% to levels not seen this year.

The euro, meanwhile, fell back from all-time highs, dropping to below $1.25 before later rallying slightly - a similar pattern to the pound, which fell 1.7% on the day to $1.8621.

The momentum overshadowed news earlier in the day of an unexpected 0.5% rise in US prices - admittedly almost entirely the result of soaring energy prices in January.

What has changed?

It remains to be seen whether the gains can be sustained.

There is a chance that both Europe and Japan, whose exporters are suffering from the strength of their currencies, could finally take action.

Zembei Mizoguchi, Japanese vice-minister for international affairs, said early on Friday that Japan would not tolerate a stronger yen.

And a senior boardmember at the European Central Bank said it was "always possible" that the ECB might finally intervene.

But the influences which have caused the US currency to slide are unchanged.

Low interest rates mean other countries' currencies offer better returns, trade and current account deficits are at record levels, and the White House still offers tacit backing for a weaker dollar.