Monetary stimulus tools such as the Fed's monthly USD85 billion bond-buying program weaken the dollar to spur recovery, and talk of their dismantling can strengthen the U.S. currency.
In U.S. trading on Thursday, EUR/USD was down 0.67% at 1.3207.
Federal Reserve Chairman Ben Bernanke said earlier this week that monetary stimulus programs may scale back this year if the economy improves, and data released earlier Thursday pointed to a U.S. economy that may be on the mend.
The Federal Reserve Bank of Philadelphia said earlier that its manufacturing index rose to 12.5 in June from -5.2 in May, well above expectations for a -2.0 reading.
A separate report showed that U.S. existing home sales climbed 4.2% to 5.18 million units in May from April’s total of 4.97 million, far surpassing market calls for a 0.6% increase.
Elsewhere, the Department of Labor said the number of individuals filing for initial jobless benefits in the U.S. last week rose by 18,000 to 354,000 compared to expectations for an increase of 4,000 to 340,000, though the numbers failed to seriously halt the dollar's advance.
Meanwhile in Europe, Germany’s manufacturing purchasing managers’ index fell to 48.7 in June compared to expectations for a reading of 49.8 and down from a final reading of 49.4 in May, according to Markit Economics, which weakened the euro.
The eurozone's manufacturing PMI rose to 48.7 in June from a final reading of 48.3 in May, though the figure remained well below the 50 level that separates contraction from expansion.
The bloc’s service-sector PMI rose to a 15-month high of 48.6 from 47.2 in May, above expectations for an increase to 47.5.
The greenback, meanwhile, was up against the pound, with GBP/USDtrading down 0.02% at 1.5481.
The Office for National Statistics said earlier that U.K. retail sales climbed 2.1% in May, surpassing expectations for a gain of 0.8% after falling 1.1% in April, the largest drop in a year.
Retail sales were 1.9% higher from a year earlier, compared to expectations for a 0.2% increase.
The ONS said food sales rose 3.5% in May, the largest increase in two years, while non-store retailing, including online sales, was up 4.3%.
The dollar was up against the yen, with USD/JPY up 1.42% at 96.69, and up against the Swiss franc, with USD/CHF trading up 1.04% at 0.9296.
The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 1.05% at 1.0381, AUD/USD down 1.14% at 0.9188 and NZD/USD trading down 2.11% at 0.77732.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.75% at 82.06.
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