The dollar fell on Thursday to its weakest against a basket of major currencies since the European Central Bank announced a program of quantitative easing in January, hit by growing concern that the U.S. economy has not just been suffering from a winter chill.
The euro surged past $1.14 for the first time since February in early trade in Europe. Sterling, resurgent since UK elections last week, hit a six-month high of $1.5815.
Traders said a handful of stop-loss orders to close losing bets on the dollar had been hit early, driving it down.
But the dominant factor was Wednesday's poor U.S. April retail sales numbers. They undermined those who thought bad weather and port strikes on the West Coast had caused a slowdown at the start of this year.
"We've just hit stops this morning, there's nothing more than that," said Peter Kinsella, a currency strategist with Germany's Commerzbank in London.
"We thought we were going to see a good recovery in Q2 after the poor Q1, and those numbers yesterday have just taken the shine off the dollar for the moment. I still think it's a correction that should allow people to get back into short euro trades, but we may have a week or two to run yet."
By GMT 1130 (7.30 a.m. EDT), the euro was up more than half a percent at $1.14165, having traded as high as $1.1431. The dollar index fell as much as 0.6 percent to 93.175.
The yen JPY=, after hitting a two-week high, and the Australian dollar AUD=D4, were both lower against the U.S. currency, with all eyes on U.S. initial jobless claims, due at 1230 GMT (8.30 a.m. EDT).
The dollar's weakness -- ending for now speculation it would approach parity with the euro -- raises questions of how other major economies that have been helped by the dollar's strength over the past year will react.
The Bank of England warned on Wednesday about the strong pound's impact on inflation, growth and the outlook for interest rates. Analysts say Australian policymakers may also find themselves under pressure to do more to weaken their own dollar if the U.S. weakness persists.
New Zealand looks to be in a stronger position. Its dollar was the biggest mover on major markets overnight, surging after unexpectedly bullish retail sales numbers.
It handed back some of those gains to trade a third of percent higher in Europe at $0.7508.NZD=D4
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