NEW YORK (Bloomberg) - The dollar fell against all of its major counterparts after the Federal Reserve announced its willingness to further ease monetary policy, damping demand for US assets.

The greenback touched a five-month low this week against the euro after US policy makers said last week they "will provide additional accommodation if needed," which may lead to lower US interest rates.

The euro touched a six-week week high against the yen as economic data in the US and Europe increased investor appetite for higher-yielding assets.

Investors next week will watch Japan for signals of yen sales after the nation sold its currency on September 15 to try and reduce its value to protect an export-led economic recovery.

"The US dollar is coming under pressure from expected easing from the Fed," said Blake Jespersen, director of foreign exchange in Toronto at Bank of Montreal. "As the stock market and commodities do well, it comes at the expense of the US dollar."

The dollar weakened 3.4 percent to $1.3492 per euro. On Friday the 16-nation currency touched its strongest level since April, when it reached $1.3495. The yen strengthened 1.9 percent against the greenback to 84.26 per dollar.

Japan's currency slid as far as 85.40 yesterday as traders speculated Japan sold the currency again. The euro rose 1.5 percent to 113.69 yen.

The euro strengthened as Ireland, Spain, Greece and Portugal found sufficient demand to sell sovereign debt. On September 21 Ireland sold 1.5 billion euros ($1.97 billion) in a bond auction and Spain sold 7 billion euros of 12-month and 18-month bills, the maximum target.

Greece sold 390 million euros of 13-week Treasury bills at a yield of 3.98 percent, the Athens-based Public Debt Management Agency said. The Munich-based Ifo institute said its business-climate index, based on a survey of 7,000 executives, increased this month to 106.8, the highest since June 2007, from 106.7 in August.

The median forecast of 36 analysts in Bloomberg News survey was for a drop to 106.4.

"We got some reasonably positive news out of the euro zone this week so there's been a brief reprieve for the euro," said Samarjit Shankar, a managing director for the foreign-exchange group in Boston at Bank of New York Mellon.

The Swiss franc reached a record high against the dollar as Japan's intervention in the market for its currency stoked demand for an alternative to the yen amid speculation the US economy will weaken. The franc reached 98.49 centimes from 1.0048 on September 17.

The Federal Open Market Committee in a statement September 21 in Washington said: "The committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery."

The US Commerce Department may report next week, the US gross domestic product probably expanded in the second quarter and consumer spending in August remained flat.

Orders for US capital equipment rebounded in August and housing starts in the US rose more than forecast, signalling a slowdown in business investment may be less severe than some economists projected.