The dollar was mired near a three-week low on Tuesday thanks to tepid US data overnight, though broadly firmer US Treasury yields prevented a sell-off. The data, showing US retail sales barely rose in September, was a rare blemish in a run of economic indicators which this month pushed 10-year US Treasury yields to their highest levels for more than seven years above 3.22 percent.
US industrial output data is due later today.
"We are seeing a cautious retreat in the dollar rather than a significant correction and incoming US data will be in the spotlight for now," CIBC Capital Markets head of G10 FX strategy Jeremy Stretch said.
The dollar index was broadly flat at 95.11, just above last week's three-week low of 94.92.
While the dollar struggled against its developed market peers, it managed to strengthen against emerging market currencies and pinned the Chinese yuan to a two-month low.
"The dollar's outlook continues to be strong against emerging market currencies due to more expected US rate hikes and the trade conflict between the US and China," Rabobank currency strategist Piotr Matys said.
One emerging market currency index held near its lowest levels for 1-1/2 years, indicating the divergence.
The euro remained broadly on the back foot, holding around $1.1573 against the dollar after the Italian cabinet's sign-off on an expansionary 2019 budget that sets up a showdown with the European Union over compliance with its rules.
However, the single currency rose against the Swiss franc,
suggesting supportive risk appetite for euro zone assets.
The New Zealand dollar advanced 0.24 percent versus the greenback to trade at 0.6567 as the domestic inflation rate came in higher than expected in the third quarter.
The Japanese yen weakened by 0.19 percent and changed hands at 111.97. The yen had hit a one-month high of 111.61 on Monday.
The Swiss franc weakened 0.17 percent versus the dollar to trade at 0.9886, after strengthening half a percent overnight. Sterling rallied half a percent after jobs data beat expectations before a crucial EU summit this week.
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