The dollar hit session lows against the euro and the Swiss franc on Wednesday, after a report of a large blast heard near the city of Dailam in Iran, thought to be fired from an unknown aircraft, according to Iran State TV. The euro pushed swiftly up to session highs around $1.3065 according to Reuters data.
Against the Swiss franc , the dollar slipped to session lows around 1.1834 francs.
"It was pretty obvious that the move (lower) in the dollar coincided with the headline about Iran," said a trader with Mellon Bank in Pittsburgh.
However, the dollar then recouped some of its losses in the wake of a stronger than expected U.S. housing starts report, traders said.