The euro fell 0.4 percent to $1.2759, extending losses and retreating further from Tuesday's two-week high of $1.28295.
"The euro is being sold because markets had believed the ministers would agree on aid for Greece at today's meeting," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo. "Instead, a settlement is postoned, highlighting the difficulty of getting consensus on the debt crisis. But I feel this is a typical European political show and an agreement will be reached."
The bearish news from Europe dragged down Asian shares, whose two-day rise had already been stalled by Bernanke on Tuesday repeating a warning that failure to avoid the $600 billion "fiscal cliff" in expiring tax cuts and government spending reductions could lead to recession in the United States.
The Fed chief said worries over how budget negotiations will be resolved were already damaging growth.
He also reiterated the Fed's guidance for keeping interest rates near zero until at least mid-2015, but offered few clues as to how the central bank might tweak its bond-purchase program at the start of next year.
Worries about the United States failing to raise its debt ceiling rattled financial markets in August 2011 and prompted Standard & Poor's to cut the top-notch U.S. government bond rating for the first time ever.
But Hirokazu Yuihama, a senior strategist at Daiwa Securities, said that for all the concerns over the fiscal cliff, most of the market expected the U.S. Congress to reach a compromise to avert the crisis.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3 percent, after holding nearly flat earlier. Hong Kong shares bucked the falling trend but pared earlier gains to rise 0.2 percent.
Japan's Nikkei stock average was up 0.4 percent, after rising to a two-month high as exporters were buoyed by a weaker yen. The yen has come under pressure on expectations that a general election on December 16 will result in victory for an opposition leader who wants the Bank of Japan to aggressively ease monetary policy.
Daiwa's Yuihama said concerns over third-quarter earnings have subsided as most Asian companies had already reported results.
"This has prompted investors to turn to economic fundamentals. Signs of recovery in the U.S. and China are offering some assurances that the global economic slump may not be as severe as previously feared, even if growth remains fragile," Yuihama said.
YEN WEAKNESS PERSISTS
Trading activity was slowing ahead of the U.S. Thanksgiving long weekend.
Going into the holiday, the dollar has been underpinned broadly by data indicating a moderate U.S. recovery taking root, while the yen remained under pressure, with more data showing Japan's economy struggling.
In the U.S. on Tuesday, a report showed U.S. housing starts rose to the highest rate in more than four years in October.
The dollar rose to a seven-month high against the yen of 81.955 yen while the euro briefly touched a peak of 105.05 yen, its highest point since May 4.
A retreat in shares dragged oil lower. U.S. crude futures pared earlier gains to be up 0.1 percent to $86.80 a barrel and Brent crude also trimmed earlier rises to be up 0.13 percent at $109.90.
Copyright @ Thomson Reuters 2012