The dollar turned flat on Wednesday against a basket of currencies, paring earlier losses following data that showed domestic new home sales unexpectedly reached a near decade high in September.
"The dollar has faded against data that were very good," said Greg Anderson, global head of FX strategy at BMO Capital Markets in New York.
New orders for U.S. capital goods rose more than forecast by 2.2 percent last month, while new home sales unexpectedly jumped to a near 10-year high in September.
Sterling climbed almost 0.9 percent against the dollar to an eight-day high of $1.3255 after stronger-than-expected U.K. growth data cemented expectations the Bank of England will raise interest rates next week. The pound was last trading at $1.3252.
The Canadian dollar fell to a 10-week low at C$1.2775 to the greenback after the Bank of Canada as expected left key overnight interest rates unchanged.
Despite Wednesday's pullback, the dollar index has gained 0.6 percent in the past week in the aftermath of reports that Stanford University economist John Taylor impressed U.S. President Donald Trump in his interview for the Fed's top post.
Taylor favors a rule-based approach to setting interest rates and is seen as someone who may put the Fed on a path of faster interest rate increases compared with Fed Chair Janet Yellen, whose term expires next February.
Trump's other possible nominees to head the Fed include Yellen, Fed Governor Jerome Powell, his economic adviser Gary Cohn and former Fed Governor Kevin Warsh. Trump is expected to announce his Fed chair candidate before his Asian trip in early November.
At 4:32 p.m. in New York, the index tracking the greenback versus six currencies was down 0.06 percent at 93.71, holding below a 2-1/2 week high of 94.017 set on Monday.
The dollar climbed to 114.245 yen, its highest since July 11 , following Sunday's victory for Prime Minister Shinzo Abe, whose ultra-loose policy should keep pressure on the yen. The dollar was last trading at 113.75 yen.
Australia's dollar tumbled 1 percent against its U.S. counterpart, to a 3-1/2-month low of $0.7699 after third-quarter consumer price readings fell short of forecast, reducing expectations of the country's central bank to raise interest rates in the coming months.
The euro gained 0.39 percent at $1.1805 before Thursday's European Central Bank policy meeting, prompted by expectations it would announce the start of trimming its monthly asset purchases to 40 billion euros from 60 billion euros in January.