The dollar tumbled on Tuesday, after five straight days of gains, as investors took advantage of weaker-than-expected U.S. retail sales to lighten hefty positions on the greenback that had built up due to expectations of an impending rate increase.
A second blow to the U.S. economic outlook came from the International Monetary Fund, which lowered its forecasts for U.S. growth to 3.1 percent for this year and next from January's expectations of 3.6 percent and 3.3 percent, respectively.
The yen, meanwhile, gained broadly, hitting a two-year high against the euro after an economic adviser to Japan's Prime Minister Shinzo Abe indicated that the currency might have fallen too far and needed to retrace some of its losses.
"I wouldn't be surprised if people bring down Q1 GDP forecasts on the data," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.
"Couple that with the IMF stuff, and I think you have reason to trim (dollar) positions," he said.