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Dollar slips further after weak US durable goods data

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The U.S. dollar fell against a basket of major currencies on Wednesday after weaker-than-expected U.S. economic data combined with a robust survey of German business morale to drive more unwinding of bullish dollar bets.

The euro rose above $1.10 for a second straight session after the Commerce Department said non-defense capital goods orders excluding aircraft dropped 1.4 percent last month after a revised 0.1 percent dip in January. The report gave investors further reason to sell dollars after a long rally in the greenback that some analysts say was overdone.

"We are hinging on data right now," said Chris Gaffney, president of EverBank World Markets in St. Louis. "This is an example of further unwinding of dollar positions."

Read MoreGerman business sentiment rises in March

The stronger-than-expected German IFO indicator for March boosted the euro earlier in the session.

Analysts said the greenback remained on an uptrend given the Federal Reserve's inclination toward tighter monetary policy in the United States versus bond-buying stimulus programs in Europe and Japan. Last week's Fed statement, which suggested a less aggressive timeline for hiking rates, has led the dollar to give back some gains.

The dollar index, which measures the greenback against a basket of six major currencies, gained about 25 percent between early May and March 17, but has since slipped about 2.7 percent in the wake of the Fed statement on March 18.

Read MoreStreet bows to dollar pressure: Dow falls 290 points, Nasdaq drops 2%

Analysts said the dollar could trade within recent ranges until the release of the U.S. monthly employment report for March on April 3. Volatility could pick up, however, given how overextended the long-dollar and short-euro trades had become, said Axel Merk, president and chief investment officer of Palo Alto, California-based Merk Investments.

"These markets are at extremes, these markets are tired, so anything can shift the sentiment," he said.

The euro was last about 0.5 percent against the dollar at $1.0973 after hitting a session high of $1.10145. That remained below the $1.10625 high hit on March 18, which marked a rebound from a 12-year trough against the dollar of $1.04570 on March 16.

The dollar was last down 0.3 percent against the Japanese yen at 119.42 yen. The dollar was up nearly 0.1 percent against the Swiss franc at 0.9599 franc. The dollar index was last down 0.35 percent at 96.86, not far from a 2-1/2 week low of 96.387 hit Tuesday.