The greenback also hit a two-week low against the euro, as the single currency got a boost from comments by European Central Bank council member Erkki Liikanen who reiterated the bank's determination to be vigilant against inflation.
"Real money investors are adjusting their portfolios and they seem less inclined toward dollar assets," said Mitul Kotecha, head of foreign exchange research at Calyon.
"Our own risk barometer has been rising. Partly it's equity volatility that's led to a rise in risk aversion and diminishing appetite for US equities. The news from GM adds to this," he added.
The dollar suffers when investors have a low-risk appetite because the US economy, which is running a massive current account deficit, is relatively sensitive to fluctuations in global investment flows.
At 1130 GMT the dollar traded 0.55 percent down on the day against the euro at $1.2131 after hitting a two-week low at $1.2151.
The dollar also hit a one-month low against sterling at $1.7898. It was half a percent down at 115.30 yen, after briefly scoring a two-year high of 116.22 in Asian trade.
The yen has been hit in recent sessions as Japanese investors have sought to park their cash in higher-yielding foreign bonds but some analysts felt that the yen's fall was overdone given the country's budding economic recovery.
Japan's top financial diplomat Hiroshi Watanabe said earlier that major currencies were moving in line with fundamentals and that he was not worried about the yen's recent levels.
General Motors Corp, the world's largest auto maker, said on Wednesday it had been subpoenaed by the US Securities and Exchange Commission as part of a probe into its accounting practices and other matters. "The GM news caused the dollar to fall, and now markets are watching the reaction in corporate bonds for signs of growing risk aversion," said Mansoor Mohi-uddin, chief currency strategist at UBS in London.
Three years ago, the dollar was hit when telecommunications giant WorldCom filed for bankruptcy protection after it revealed improper booking of expenses. Investors have started buying the euro against the dollar in recent sessions on the view that the US currency's yield advantage would diminish over time as the ECB starts to raise interest rates amid a brightening growth outlook and inflation concerns.