The safe-haven Swiss franc rallied against the dollar and euro on Thursday after explosions on packed rush-hour trains in Madrid killed 173 people.
Interior Minister Angel Acebes said armed Basque separatists ETA were responsible for the series of blasts, which wounded over 600 people.
Initially news of the explosions weighed mainly on the euro but the dollar also stumbled for a while when markets started to wonder if the blasts were related to global terror networks.
"From a market reaction perspective the key issue is who's responsible, although I suspect that as we get closer to the US data maybe the issue will have a little bit less resonance in the markets," said Steven Pearson, chief currency strategist at Halifax Bank of Scotland Treasury Services.
"It's just the fear that it could be somehow related to al Qaeda that caused the spike higher in euro/dollar."
By 1255 GMT, the euro traded a touch higher against the dollar at $1.2267 after earlier tumbling to one-week lows and then recovering sharply to hit $1.2305.
However, the single currency traded down half a percent lower against the Swiss franc at 1.5671 after hitting a one-month low of 1.5656.
The dollar traded down two thirds of a percent against the Swiss franc at 1.2775 and was a touch weaker at 110.62 yen.
US weekly jobless claims, February import and export prices and February retail sales are due at 1330 GMT, while Federal Reserve Chairman Alan Greenspan testifies on the roles of education and innovation in producing sustained economic growth at 1500 GMT. Speaking on local radio, a radical Basque nationalist leader said he did not believe "even as a hypothesis" that ETA was responsible for the attacks in Madrid. This had led markets to worry the blasts could have been the work of global terror groups.
"The Swiss franc has been bid since the news came out. It's been bid all day against both the euro and the dollar," said Pearson.
"If it is related to a global terror network then it is dollar negative and it is negative for all risky assets. An attack that is related to local terrorism is a more market neutral event though not totally market neutral. It's marginally euro-negative given it took place in the eurozone."
The dollar's gains versus the euro earlier in the session came as markets shrugged off weak US trade data.