The U.S. dollar declined against the euro and other major rivals on Friday after a report said existing-home sales rose more than expected last month, boosting equities to the detriment of the U.S. currency.
Also, Federal Reserve Chairman Ben Bernanke said in a speech that the economy is leveling out and central banks' actions averted a bigger crisis.
The euro traded at $1.4329 in recent action, up from $1.4270 in North American trade late Thursday. It's poised to gain for the week, after closing at $1.4203 last Friday.
The dollar index (DXY), which tracks the greenback against a trade-weighted basket of six major currencies, fell to 78.099, down from 78.330 late Thursday. The index has lost 0.9% this week.
The dollar turned higher versus the Japanese yen, which was the biggest loser as investors sought riskier assets like stocks. The U.S. currency bought 94.40 yen, recovering from 93.68 yen in earlier trading and up from 94.18 yen on Thursday. A week ago, the dollar bought 94.88 yen.
The dollar showed its usual response to the better housing data, moving higher versus the yen, and lower against everything else, said analysts at Action Economics.
Resales of U.S. single-family homes and condos rose 7.2% in July to a seasonally adjusted annual rate of 5.24 million, the highest level since August 2007, the National Association of Realtors reported Friday. Economists surveyed by MarketWatch expected home sales to rise to a 5 million pace in July from 4.89 million the previous month.
In a speech at the Kansas City Fed's annual retreat in Jackson Hole, Wyo., Bernanke summarized a hellish year and explained modestly how he and his central bank colleagues saved the world from a bigger disaster.
Bernanke made almost no comments about the future course of the U.S. or global economies. He cautioned that any recovery is likely to be gradual at first, with high unemployment. The biggest U.S. government securities dealers are widely divided on when the central banks will begin raising its target interest rate.
The dollar's retreat had started earlier Friday, erasing an earlier rise versus the euro after an influential survey of purchasing managers indicated the single-currency region was poised to return to growth in the third quarter.
Markets were looking for much more modest gains from the region's two largest economies and the fact that the PMI surveys have now broken into expansionary territory suggests that the pace of recovery is stronger than many skeptics, including us, believed, wrote Boris Schlossberg, director of currency research at GFT.
That reversed the earlier tone, which had seen traders shying away from riskier assets as China led Asian equities lower amid concerns over a possible tightening of credit.
Schlossberg said the euro could make a run at its yearly high of $1.4444 versus the dollar, but said news out of China could still cap investors' risk appetite.